Deutsche Bank rejects speculation on merger talks after media reports

FRANKFURT (Reuters) – Deutsche Bank (DBKGn.DE) described as "fictions" the speculation that it could seek a merger, after the media hinted that the largest German lender could seek to get closer to the Swiss bank UBS or its German counterpart, Commerzbank.

Speculation about a possible merger intensified as the battles of Deutsche Bank resulted in three years of losses.

The business daily Handelsblatt reported on Tuesday that the bank had studied the effects of a theoretical rapprochement with UBS (UBSG.S), citing anonymous people who know the problem.

The Handelsblatt report, the latest of several articles in the German financial press on the subject, said the UBS scenario and a potential merger with Commerzbank (CBKG.DE) was discussed at the bank's strategic meeting with the supervisory board this month.

James von Moltke, Chief Financial Officer of Deutsche Bank, called the news "fiction of the press".

"I must say that these days, we are constantly surprised by what goes through the editorial filters and the press," he said.

Von Moltke said the bank had a lot of work to do on the merger of its retail units, which would take several years.

Reports in the media resumed after Deutsche Bank changed direction and announced a strategic review that included thousands of job cuts and a reduction in its global investment bank.

UBS and Commerzbank declined to comment on Wednesday's Handelsblatt report.

According to the Handelsblatt report, a potential merger with UBS would be better than an agreement with Commerzbank, as Deutsche Bank and the Swiss lender would complement each other well in the areas of investment banking and wealth management.

A merger with Commerzbank, on the other hand, could result in high restructuring costs due to significant overlap, the newspaper reports.

On Monday, Deutsche Bank chief executive Christian Sewing held back speculation of a possible short-term merger, saying the bank should focus on homework for the next 18 months.

In the past, UBS was disoriented by large buyouts, reflecting debates in Switzerland about banks too big to fail.

Handelsblatt quoted an unnamed source as saying that the leaders of Deutsche Bank's strategic meeting stressed that any immediate merger was "totally unrealistic".

The German government, which owns more than 15% of Commerzbank, has also fueled speculation on mergers.

Finance Minister Olaf Scholz said the country needed strong banks to encourage exports. Some bankers consider this a change of sentiment and allude to a desire to support the financial sector, including helping to create a merger.

According to the scenario of the merger with UBS, Deutsche would be the junior partner and the German government should accept it, according to the newspaper.