Saturday, 20 April, 2019

German gov't should not intervene in bank merger talks: Merkel

19 Mar 2019, 19:16 ( 1 Month ago)

DF-Xinhua Report
German Chancellor Angela Merkel. File Photo Xinhua.

The German government should "not cast a vote" on the potential merger between Deutsche Bank and Commerzbank, German Chancellor Angela Merkel said at a conference here on Tuesday.

   Merkel noted that while the German government had an interest in evaluating the potential merger, it would ultimately be a "decision for the private sector" to make. 

   Although the German government holds a stake of more than 15 percent in Commerzbank, only the private sector players themselves could reach decisions regarding the "challenges, opportunities and risks" associated with a merger, said Merkel.

   German Minister of Economic Affairs Peter Altmaier emphasized that he had a great interest in strong German financial institutions but noted that the details of "which partners, under which conditions" would have to "first be clarified by the affected parties themselves."

   Joachim Wuermeling, board member of the German Bundesbank who also sits on the European Central Bank's supervisory board, said "mergers require a viable and sustainable business model." The Bundesbank would therefore be "thoroughly analyzing" the assumptions in the merger plans presented by Deutsche Bank and Commerzbank.

   Wuermeling emphasized that the Bundesbank, in its capacity as the supervisory authority, would remain neutral on the issue of bank mergers. "Although we accompany such processes, we certainly do not initiate them."

   Isabel Schnabel, member of the German Council of Economic Experts and professor at the University of Bonn, cautioned against the possibility of the two banks merging, saying it was "a very bad idea in every respect."

   Given the German government's share in Commerzbank, the state guarantee would have to increase to ensure the new bank would not go under, Schnabel added.

   Germany's two largest private banks, Deutsche Bank and Commerzbank, announced on Sunday that they had begun exploratory talks toward a possible merger. If the plans were to go through, they would create Europe's fourth largest bank with combined assets of 1.81 trillion euros (2.05 trillion U.S. dollars) and a market value of about 25 billion euros.

   Germany's Finance Minister Olaf Scholz and his deputy Joerg Kukies first called for a "national champion" in the banking sector last summer, initiating the public discussion about the possible merger of the two large private German banks.

   This week, however, Scholz distanced himself from the Deutsche Bank and Commerzbank discussions and said "they are private banks and reach their own decisions."