Unions mobilize to fight merger between Commerzbank and Deutsche Bank

The battle around German banks was traced this week as more than 250 Commerzbank employees gathered in central Stuttgart, waving placards to protest the merger of negotiations between the lender and rival Deutsche Bank.

"We are convinced that we can defeat the merger," said Stefan Wittmann, union representative and member of the supervisory board of Commerzbank, at the event.

Tuesday's rally paved the way for a series of union-sponsored marches and strike strikes in preparation for a bitter campaign against the ongoing merger talks between the bosses of Germany's two largest publicly traded lenders.

The banks began talks after the ministers' encouragement in Berlin, worried about the low profitability that was draining the economy. Deutsche is seeking to complete the negotiations by April 26, when it will release its first quarter results.

Headed by Verdi, the German service sector trade union, which has 2 million members, the 78,000 national employees of both lenders are resisting an agreement that could put nearly half of these jobs on the list.

Given the crucial role played by the unions in the consensus-based German enterprise culture, the workers' protests are more than a background noise for a transformative deal that would create the second largest bank in the world. euro zone with 1.8 billion euros of badets and 845 billion euros of deposits.

Over the next few days, Verdi will organize one – day workshops in all major German cities, including Berlin, Munich, Frankfurt and Cologne. Formally, temporary strikes deal with unresolved wage bargaining in the sector, but the protests will also be motivated by the anxiety of the merger.

Christa Remme, a board member of the Commerzbank Workers' Council in Stuttgart, who deals with large corporate clients, predicted that the merger would entail heavy revenue losses due to the loss of business from straddling customers.

"Many large customers tell us that their exposure to risk [to a merged group] would be too big and they would not want to depend on a single bank, "Remme said. She added that "all my colleagues are convinced that a merger would not create value".

This point of view, and not just the fear of job cuts, is what galvanizes union protests. Stephan Szukalski, DBV union leader and member of the Deutsche Supervisory Board, said the loss of about 30,000 jobs was not his main concern.

In theory, these reductions could be mitigated by attractive redundancy plans. "My main concern is that an agreement would create something that will not be able to survive," he said.

As in most publicly traded German companies, employee representatives control half of the supervisory board seats of the two lenders. Although the chairman has a casting vote, the agreement would only take place if it was supported by all the representatives of the shareholders of the supervisory board.

The staff representatives of the two banks have flatly rejected the agreement, and at least some of the shareholders' representatives on the supervisory boards of Deutsche and Commerzbank are extremely skeptical, according to informed people.

"The shareholders are aware that there is very little argument for an agreement," said Mr Wittmann, head of Verdi.

The unions are also trying to sow discord within Angela Merkel's grand coalition and especially among the left-wing social democrats. The transaction is led by two SPD politicians: Finance Minister Olaf Scholz and his deputy, Jörg Kukies, former Co-Head of Goldman Sachs in Germany.

The workers' representatives contend that Mr. Kukies should have withdrawn from the transaction after Commerzbank hired his former employer as a merger and acquisition advisor, citing a potential conflict of interest.

"The CDU-CSU will take up this issue, as [opportunity to weaken the SPD] is welcome in the run-up to the European elections [on May 26], Predicted a Berlin insider.

Verdi is pushing the top SPD in camera, urging them to oppose an agreement that could further undermine voter support for a party that has already voted at historic lows.

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Representatives of Deutsche workers also threaten to jeopardize any future integration of Postbank, which is still managed separately ten years after its acquisition by Deutsche, if the lender decided to merge with Commerzbank.

Commerzbank's core employees fiercely oppose the merger. Several colleagues of Mr. Wittmann still have painful memories of the unfortunate acquisition of Dresdner Bank by the bank, more than ten years ago.

"It was quite a job, despite similar internal cultures in Dresdner and Commerzbank," said Rüdiger Arndt, chairman of the workers' council of Commerzbank in Stuttgart. He said that a merger with Deutsche, often touted as having an arrogant approach, would create a "culture shock".

Commerzbank employees fear being the first victims of job cuts. The smaller bank would be the junior partner in a merger. In addition, Commerzbank staff are less protected against lay-offs: Deutsche retail store staff are guaranteed against forced lay-offs until mid-2021.

This concern prompted the workers' council to ask the Commerzbank chief executive last week to abandon the takeover talks in an official protest note.

This has also led to an increase in the number of union members at Commerzbank, which traditionally is not a hotbed of worker activism. "Since the beginning of the year, we have gained 2,000 additional members as colleagues," Wittmann said.