Investors and politicians reinforce the merger of German banks

One of Deutsche Bank's largest shareholders, who for months lobbied hard against the merger with Commerzbank, acknowledged that despite widespread skepticism, the momentum for an agreement "seemed impossible to stop" .

The comments of Deutsche Bank's five largest shareholders suggest that the idea of ​​a merger between the two largest German listed banks has strengthened.

"We are still not convinced that a merger makes sense, but we are not going to a fundamental opposition," said a relative of the fifth investor in the Financial Times.

Deutsche and Commerzbank shares traded up 4% and 7% on Monday, respectively, after revealing Sunday that they had entered into formal merger negotiations. A transaction would create the second largest lender in the euro zone with 1.9 million euros in badets, 140,000 employees and 845 billion euros in deposits.

The potential agreement is supported by the German Finance Minister, Social Democrat Olaf Scholz; Deutsche President Paul Achleitner; Martin Zielke, Managing Director of Commerzbank; and the US private equity group Cerberus, which invests heavily in both lenders.

The Social Democrats, a junior partner of Chancellor Angela Merkel's grand coalition, warmly welcomed the news of Monday's talks. "The German economy needs a world bank capable of being among the best international banks," said Harald Christ, chairman of the SPD's economic forum.

It is suspected that it is not a reasonable concept, but considerations of political prestige and control played a role

Christ said consolidation of the banking sector was "long overdue" and that a "competitive international champion is needed on the financial center". He added, "Obviously, every job loss would be painful. But doing nothing is the worst alternative.

However, political opponents of an agreement also expressed themselves. "This merger is not motivated by the shareholders, by the people of this bank, but by the politicians and the Finance Minister Scholz," said Florian Toncar, spokesman for the party's financial policy. FDP companies.

"And we suspect that it is not a reasonable concept, but that considerations of political prestige and control played a role," Toncar said. "The two largest banks in Germany would become bigger. I really wonder if it makes sense for the market. "

Deutsche Bank Chairman Christian Sewing on Sunday told his employees that "at this point, there is no certainty that a deal will materialize," stressing the company. past experience showing that & # 39; "There can be many potential economic and technical factors that could hinder or prevent such an approach."

Despite significant hurdles to the conclusion of an agreement, the main investor expects a swift decision and expects a 80% merger probability, given government support and damage to the reputation that backtracking could cause to Deutsche Bank.

A person close to Deutsche Bank's second largest Deutsche Bank investor said that his long-standing doubts about the merits of a merger remained unchanged. "Given our current knowledge, we are not convinced that a merger is piling up," said the person, adding that the investor needed a plan of action. detailed integration before rendering a final verdict.

advisable

The powerful German service trade union, Verdi, which includes vice-presidents of Deutsche Bank and Commerzbank among its members, is fiercely opposed to a merger.

"We are refusing a potential merger of the two lenders as this would create tens of thousands of jobs," said Jan Duscheck, Verdi's representative on Deutsche Bank's Supervisory Board. He added that a merger would create additional risks when the two banks would not have completed their own internal restructurings.

Economists also doubt much of such a rapprochement. Jörg Rocholl, chairman of the Berlin-based ESMT and vice chairman of the advisory board of the Ministry of Finance, said: "I do not see the merit interest" because bank mergers past suggests that synergies are much more difficult to achieve than in practice. on paper.

Isabel Schnabel, a professor of economics at the University of Bonn and a member of the council of economic experts of the government, warned that such an agreement would create a lender of "enormous size and complexity that it would even more difficult to liquidate in the event of a crisis ".