March 13, 2019 / 11:31 AM / a month ago

Germany's Scholz criticised by senior conservative over role in Deutsche merger talks

BERLIN, March 13 (Reuters) - German Finance Minister Olaf Scholz has faced calls from a conservative ally to clarify his role in talks about a possible merger between Deutsche Bank and Commerzbank, amid criticism there is no need for such a union.

Scholz confirmed on Monday the two German lenders are exploring a tie-up after weeks of media speculation. Deutsche Bank and Commerzbank gave no comment.

Berlin has been worried about Deutsche Bank, Germany’s largest lender, which has struggled to generate sustainable profits since the 2008 financial crisis. It is trying to turn itself around under new leadership, but has faced hurdles such as allegations of money laundering and failed stress tests.

“The finance minister must end the speculation with a clear statement,” Hans Michelbach, deputy leader of the conservative CSU party in Germany’s lower house of parliament, told Reuters.

Michelbach called on Scholz to clarify the government’s role, adding there was “no compelling need” for such a tie-up.

“The benefits of a merger are limited. At the same time, the risks are high,” he said. Instead of talking about a merger, both banks should focus on their current challenges and pursue their own growth opportunities separately, he added.

Michelbach warned the creation of one single banking giant could also harm Germany’s competitiveness for businesses.

Florian Toncar, senior opposition lawmaker from the business-friendly Free Democrats (FDP), accused the government of promoting the merger by giving a kind of state guarantee for the merged institution.

“Those who do that have not learned anything from the financial crisis,” Toncar told Reuters. Those that want to strengthen Germany as a finance centre should not interfere in corporate structures, but improve business conditions for all.

Economy Minister Peter Altmaier, a senior conservative and Merkel confidant, last month presented a new industrial strategy in which he called for the creation and protection of national champions, mentioning Deutsche Bank among other companies.

Scholz is due later on Wednesday to answer questions from lawmakers in a closed-door meeting of the Bundestag’s Budget Committee.

Earlier on Wednesday, Finance Ministry official Christine Lambrecht told members of the Bundestag’s Finance Committee that the government was not pushing for a merger of the banks, according to parliamentary sources.

Lambrecht rejected the accusation that Berlin was interfering in a private-sector matter, one participant of the closed-door meeting told Reuters.

Lambrecht also noted the government’s 15-percent-stake in Commerzbank alone was not enough to push through a merger, even if Berlin wanted such a scenario, the source added. (Reporting by Michael Nienaber and Christian Krämer Editing by Alexandra Hudson)

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