Top executives of Deutsche Bank agreed to informally discuss a possible merger with competitor Commerzbank.
The two biggest banks in Germany are exploring strategic alternatives following an extended decline in their financial performance and stock prices.
The Wall Street Journal also reported that German government officials have increased pressure on Deutsche Bank and Commerzbank to improve their performance and to consider merging.
The Welt am Sonntag newspaper earlier reported that the management board of Deutsche Bank agreed to enter merger discussions with Commerzbank.
Top executives of Deutsche Bank comprise the management board and determine the bank’s strategy. Paul Achleitner, the chairman of Deutsche Bank, is a driving force behind a potential merger with Commerzbank.
The banks’ so-called supervisory boards hire and fire top executives and participate in major decisions, including whether to merge with another bank. A formal directive by the supervisory boards of Deutsche Bank and Commerzbank to pursue a merger would require public disclosure. But that hasn’t happened.
A senior regulator in the German government told the Wall Street Journal he reviewed a plan to merge the banks and unofficially endorsed it. The regulator and other sources said Germany’s finance minister, Olaf Scholz, and his Social Democratic Party have pushed for the merger.
The Journal also reported last week that shareholders and analysts are worried about the risky challenges of a Deutsche-Commerzbank merger, including complex technological integration, staffing reduction and management alignment.
The two banks would need to eliminate as many as 40,000 jobs in Germany alone to make a merger economically feasible.
Officials of Deutsche Bank and Commerzbank have said privately that they need government support for a massive reduction in staffing. [Wall Street Journal] – Mike Seemuth