Deutsche Bank and Commerzbank in formal merger talks

Germany’s two biggest lenders, Deutsche Bank and Commerzbank, will hold formal talks about a merger.

The announcement caps months of speculation that the two struggling banks would attempt to combine.

A merger could result in massive cost savings, in particular by closing branches. But critics say integrating the firms would be complicated and risky.

The German government appears to favour a deal.

Deutsche Bank has been struggling to generate growth and has been hampered by losses at its US investment banking operations.

« What is also important to me is that we will only pursue options that make economic sense, building on the progress we made in 2018, » chief executive Christian Sewing said in a letter to employees.

Unions fear that more than 10,000 jobs could be cut as a result of the deal.

  • Germany narrowly avoids recession

Commerzbank has also been struggling to generate growth.

The German government still owns a 15.5% stake in Commerzbank, acquired after it bailed it out following the financial crisis.

Both banks are also facing a slowdown in the Eurozone and last year the German economy narrowly avoided falling into recession.

Source: BBC

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