StockBeat: Deutsche Bank – The merger between Commerzbank and Investing.com

By Geoffrey Smith

Investing.com – News in the banking sector stands out in a generally poor start to the day on the European stock markets.

The two largest German banks in the private sector, German Bank (DE 🙂 and Commerzbank (DE :), canceled their discussions on the merger, under pressure from shareholders, regulators and unions.

The proposed merger has never been the preferred option of any of the banks, as both are more concerned with the goal of reversing chronically unprofitable transactions. The talks were largely due to political pressure from the German Finance Ministry to ensure the survival of a national champion.

This logic did not convince the regulators, who feared the creation of a new bank "too big to fail" that would hold German decision-makers, nor the unions of the two institutions, who feared up to 30,000 job cuts .

Deutsche rose 3.2% after overcoming the nightmare of such a politically charged merger, although valuing equities at just 0.24 times their book value is a daunting task. The Commerzbank stock is down 2.0%, reflecting the loss of a potential buyer.

Even in this case, it is not impossible that a sort of bidding war continues for the bank: Unicredit (MI 🙂 SpA and ING (AS :), based in Italy, both expressed interest, according to recent reports, and BNP Paribas (PA 🙂 had also examined the Commerzbank a few years ago. None of these actions reacts with enthusiasm to the idea that they could now be more likely to get their hands on it.

Somewhere else, Barclays (LON 🙂 fell by 2%, despite generally satisfactory results, particularly as its investment banking division is even better than many US competitors in the first quarter turmoil. This should strengthen the position of CEO Jes Staley, who will face a motion at next week's shareholders meeting to admit activist investor Edward Bramson to the board of directors. Bramson insists that the investment bank be sharply reduced.

At the same time, the shareholders meeting of Royal Bank of Scotland (LON 🙂 was preceded today by the announcement of the resignation of the CEO, Ross McEwan. It will serve again for the next year. Under McEwan, RBS has returned to profitability and solved most of the governance scandals that have plagued it over the past decade.

None of this prevents a wave of profit taking in markets across the continent, however. The benchmark was down 1.10 point, or 0.3% to 389.78, while it was down 0.5% and German 0.3%, depressed by darker statements by central banks in South Korea and by weak economic statistics.