The possibility of merging Deutsche Bank AG and Commerzbank AG has won the backing of German officials who are seeking a new champion that would protect the nation’s economy from an exodus of foreign capital.
The German government is in favor of a tie-up between its two biggest banks to create a heavyweight that would finance the nation’s export-oriented economy, people involved in the discussions said.
A merger could ensure credit remains open to German companies even during a financial slowdown when foreign investors might withdraw capital, the people said.
Germany is eyeing a domestic solution to prepare for the next slowdown — and to ensure that its vast companies stay afloat — as the EU drags its feet on the banking and capital markets union many bank heads and regulators say the continent needs to propel more cross-border deals.
While policymakers in Berlin are first looking at a German combination, they are open to a wider merger with a European player outside the country once the banking, fiscal and capital-markets union is complete, the people said.
The German Ministry of Finance, Deutsche Bank and Commerzbank all declined to comment.
Deutsche Bank chairman Paul Achleitner is said to have also discussed the option with German officials, although the bank is said to be wary of a deal because it is still seeking to show that it can thrive on its own.
While the government is in favor of a deal, none of the people suggested that German Chancellor Angela Merkel’s government is pushing for a combination now.
However, German Minister of Finance Olaf Scholz’s warnings about the state of Germany’s banks are gaining urgency along with his calls for European policymakers to complete a banking and capital markets union, which would open the door to more consolidation.
“We must complete the banking union now so we have instruments and options” in case another financial crisis strikes, Scholz said in a speech on Sept. 14, echoing calls by Deutsche Bank chief executive officer Christian Sewing and European Central Bank President Mario Draghi.
The merger speculation has occurred before. The two banks held talks in the summer of 2016, but decided against a deal while they focused on restructuring their own businesses, a person with knowledge of the matter said at the time.
With a stake of more than 15 percent in Commerzbank dating back to the financial crisis a decade ago, the government has a direct interest in the future of the nation’s second-biggest lender.
Although the government says it does not intervene in private-sector decisions, a merger with Deutsche Bank is likely to require its approval.
For Scholz, the lessons of the crisis are clear: Strengthen banks when times are good.
In a recent op-ed, he told Germans that the federal government put up more than 30 billion euros (US$35 billion) to stabilize the financial industry since 2008.
“Today, we are wiser,” he wrote in the Frankfurter Allgemeine Zeitung.
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