Deutsche Bank

Deutsche Bank and Commerzbank have abandoned merger talks, amid shareholder concerns over the complexities of the proposed move.

The two German banks decided not to pursue the merger after it was concluded that it would not provide “sufficient benefits”, creating instead additional costs and risks.

Talks between the lenders only begin last month, however, doubts already surfaced over the viability the tie-up early on.

If the merger had gone ahead, it would have seen the creation of Europe’s fourth largest banking institution.

The deal was also backed by the German government, who still own a 15% stake in Commerzbank after bailing the lender following the global financial crisis back in 2008.

Deutsche Bank chief executive, Christian Sewing, said in a statement: “It made sense to evaluate this option for domestic consolidation in Germany. However, we were always clear: we needed to be convinced that any potential combination would generate higher and more sustainable returns for shareholders and allow us to enhance our value proposition to clients,”

“After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration. I would like to thank Martin Zielke and everyone involved for the constructive discussions over the past few weeks.”

Alongside announcing the end of talks, Deutsche Bank also pre-released an update on its preliminary q1 results.

Deutsche Bank said it expects to report pre-tax incomes of approximately €290 million and net income of approximately €200 million, on the back of €600 million fines during the quarter.

In addition, the bank said it expects total revenue of €6.4 billion euros, including €3.3 billion in its Corporate & Investment Bank division.

Meanwhile, total non interest expenses and adjusted costs are expected to total €5.9 billion euros, including previously mentioned fines.

Shares in Deutsche Bank (ETR:DBK) are currently down marginally -1.37% as of 12:58PM (GMT). Similarly, Shares in Commerzbank (ETR:CBKD) are currently down -2.65%.

 

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Nicole Jeary
Nicole covers emerging global economic and political events for The UK Investor Magazine. Her focus is particularly upon company news and political developments in Europe and the US.