Will and representation

25 January 2019 By Christopher Thompson Follow @CGAThompson

The German government is still exploring a merger between the ropey domestic lenders. As a way to create economic returns for investors, it’s underwhelming. As a means to limit capital injections if Deutsche Bank’s various U.S. woes become massive fines, it has some logic.

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Germany’s finance ministry has asked banking regulator Federal Financial Supervisory Authority (BaFin) to share its analyses of a potential merger between its two biggest banks by assets, Deutsche Bank and Commerzbank, according to a report in the Financial Times on Jan. 17 which cited “people briefed on the matter”.

The newspaper added that German officials were worried about the sliding share prices of both lenders and were considering greater consolidation in the sector.

On Jan. 22 Germany’s Verdi labour union voiced concern over any possible merger between Deutsche Bank and Commerzbank, according to a Reuters report.

Jan Duscheck, head of Verdi’s banking division, said that any possible merger would lead to big job cuts.

Olaf Scholz, German finance minister and vice chancellor, has previously called for the creation of a national banking champion and revival of the country’s industrial policy.

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