A joined bank would likely be the third largest in Europe after HSBC and BNP Paribas, with roughly 1.8 trillion euros ($2.04 trillion) in assets, such as advances and investments, and a market value of about 25 billion euros.
However, skeptics questioned the wisdom of a merger.
“We do not see a citizen champion here, but a shaky zombie bank that could lead to another billion-euro grave for the
German articulate. Why should we take this risk?” said Gerhard Schick, finance activist and ex-member of the German parliament.
While the banks had not publicly commented on amalgamation talks until Sunday, Finance Minister Olaf Scholz last Monday confirmed that there were negotiations.
On Sunday, the clericals acknowledged the announcement and said it remained in regular contact with all parties.
However, there were signs of partisan opposition.
Hans Michelbach, a lawmaker from the Christian Social Union (CSU), the Bavarian sister party of Chancellor Angela Merkel’s Christian Representative Union (CDU), urged the government to sell its 15 percent stake in Commerzbank before a deal.
“There may not be an ownership by the federal control in a merged big bank indirectly through an old stake. We do not need a German State Bank AG,” he told Reuters.
The supervisory houses of both banks are scheduled to hold long-planned meetings on Thursday, four people with knowledge of the matter stated Reuters. The status of merger negotiations is expected to be discussed.
A merged bank would have one fifth of the German retail banking sell. Together the two banks currently employ 140,000 people worldwide — 91,700 in Deutsche and 49,000 in Commerzbank.
Germany’s Verdi labor syndicate on Sunday renewed its objections to a merger, saying that tens of thousands of jobs were at risk and that a delay added no value.
Jan Duscheck, head of the union’s banking division and a member of Deutsche’s supervisory board, said the conjunction would raise its concerns on both banks’ oversight bodies.
Deutsche emerged unscathed from the financial bang but later lost its footing. German officials fear a recession or big fine could derail the bank’s fragile pick-up.
Other than Deutsche, Commerzbank is Germany’s only remaining big publicly-traded bank, after a series of mergers.
Commerzbank has also struggled to bounce, and German officials say it is vulnerable to a foreign takeover. If an
international rival snapped it up, that would increase competition for Deutsche on its competent in turf.
Initial reaction among analysts to a deal was skeptical.
There will only be limited benefits of combining Commerzbank’s clientele of retail and small and medium businesses to Deutsche, said David Hendler, an independent analyst at New York-based Viola Hazard Advisors, which specializes in risk management.
“It doesn’t change the fact that Germany is not getting a flagship bank that can strive on the world stage. It’s still a stunted bank with a lot of problems,” Hendler said.
One of the biggest risks is how to fill what one German authorized has told Reuters will be a multi-billion-euro financial hole because a merger could trigger an adjustment to the valuation of some bank investments.
Commerzbank, for norm, has about 30.8 billion euros of debt securities such as Italian bonds that now have a value of 27.7 billion euros. A slow-down could crystallize this loss. Deutsche has such securities at market value in its accounts.