Deutsche, Commerzbank shares leap on new merger reports

Shares in Germany’s top two lenders Deutsche Bank and Commerzbank surged yesterday as the country’s finance minister appeared to confirm reports they were bowing to pressure from Berlin to open merger talks. Deutsche’s stock had gained 4.9 per cent to trade at 8.05 euros ($9.04), while Commerzbank added 7.7pc at 7.14 euros. “There are talks about the situation as it is. The federal government is a fair companion to private business discussions but I have nothing more to say about it just now,” Finance Minister Olaf Scholz said earlier at a meeting with European counterparts in Brussels.

Citing sources close to the matter, both weekly Welt am Sonntag and the Financial Times have reported that the two Frankfurt firms are finally heeding calls to explore a crosstown merger, although the talks are not yet advanced enough to trigger an official market notification. Economy Minister Peter Altmaier has joined France’s Bruno Le Maire in calling on the EU to relax merger rules and allow the creation of world-spanning businesses, after Brussels rejected a tie-up between Siemens’ rail division and French train-maker Alstom.

Critics of a potential deal have pointed to both Deutsche and Commerzbank’s weakened state in the wake of the financial crisis. Commerzbank is still partowned by the German state, after Berlin had to step in following its 2009 acquisition of troubled Dresdner Bank, and is partway through a tough restructuring. Deutsche, too, is reorganising, and returned to the black only last year after years spent fighting the financial and legal fallout of its breakneck pre-crisis expansion with costs running into the billions.

One reason for the two lenders’ long fight back to profitability is the tough environment in Germany, where intense competition including from public savings banks squeezes margins on retail banking.