December 7, 2018 / 11:04 PM / 2 years ago

German finance ministry looking at Deutsche, Commerzbank merger scenarios: Focus

FILE PHOTO - Banners of Deutsche Bank and Commerzbank are pictured in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, September 30, 2016. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - The German government is ready to orchestrate a merger between Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) to ensure that Europe’s largest economy has at least one lender capable of backing its companies abroad, Focus magazine reported.

The finance ministry said it did not want to get involved in any speculation. Deutsche Bank declined to comment but referred to recent comments by CEO Christian Sewing dismissing persistent merger speculation.

Deutsche, facing negative headlines around two high-profile money laundering cases, has seen its share price fall to record lows. Shares in Commerzbank, which was bailed out after the global financial crisis a decade ago, have also headed lower.

Citing sources familiar with the matter, Focus said that the finance ministry was examining scenarios including one in which the state takes a stake in Deutsche Bank and then leads a merger of the two banks through a share swap.

A second option being examined was to tap investors and possibly the German state to finance a takeover of Commerzbank by Deutsche, Focus said, while a third would foresee creating a holding company as a vehicle for a merger.

Sewing opposes a merger with Commerzbank, Focus said, while Commerzbank CEO Martin Zielke is open to the idea. Commerzbank did not immediately respond to a request for comment.

Deutsche’s shares have declined by 51 percent this year and Commerzbank’s by 45 percent. Deutsche’s market capitalization has shriveled to 15.9 billion euros ($18.1 billion), while that of Commerzbank, recently dropped from the DAX blue-chip index, is down to 8.6 billion. ($1 = 0.8780 euros)

Reporting by Michelle Martin and Hans Seidenstuecker; Writing by Douglas Busvine; Editing by Elaine Hardcastle

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