Discussions for the merger of the two largest German banks

The largest German banks, Deutsche Bank and Commerzbank, have announced formal talks on their merger.

The announcement was made after months of speculation about the merger of the two troubled banks.

This merger could significantly reduce operational costs, particularly after the closure of some agencies. But critics say the merger would be complex and risky.

The German government seems to support the agreement.

The German government still holds 15.5% of Commerzbank's assets, after its financial intervention to save the bank in the wake of the global financial crisis.

German Finance Minister Ulf Schultz reportedly urged both banks to consider the merger, saying Germany needed a "national banking giant" in its financial sector.

The merged banks will control the five percent of the business on German Finance Street and about 1.8 trillion euros of assets, such as loans and investments.

"What matters to me is that we only pursue economically viable operations, based on progress made in 2018," Deutsche Bank Managing Director Christian Swing said in a letter to staff.

Deutsche Bank is striving to make sustainable profits and losses in its investment in the banking business in the United States.

Commerzbank also has difficulty making a profit.

Both banks were hit by the economic slowdown in the eurozone and Germany late last year, while the German economy was struggling to spare a small margin to avoid a recession.

Critics of the agreement say the merger of failing banks will create a problematic bank.

The deal is facing union opposition, fearing that it will lead to the cancellation of more than 10,000 jobs when it is approved.