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Deutsche Bank dismisses merger talk speculation after media reports

Posted by: Admin | Posted on: September 26th, 2018 | 0 Comments

FRANKFURT (Reuters) – Deutsche Bank (DBKGn.DE) has dismissed as “fictions” speculation that it might seek a merger, after media reports suggested Germany’s biggest lender might seek tie ups with Switzerland’s UBS or German peer Commerzbank.

Speculation about a possible merger has increased as Deutsche Bank battles to recover from three years of losses.

Business daily Handelsblatt reported on Tuesday that the bank had studied the effects of a theoretical tie-up with UBS (UBSG.S), citing unnamed people familiar with the matter.

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Handelsblatt’s report, the latest of several in the German financial press on the issue, said the UBS scenario and a potential merger with Commerzbank (CBKG.DE) was discussed at the bank’s strategy meeting with the supervisory board this month.

Deutsche Bank Chief Financial Officer James von Moltke dismissed the reports as “fictions of the press”.

“I have to say these days we are constantly amazed at what passes through the editorial filters and gets into the press,” he said.

Von Moltke said the bank had a lot of work to do on the merger of its retail units, which would take several years.

Reports in the media have picked up after Deutsche Bank changed its management and announced a strategic overhaul that includes thousands of job cuts and scaling back its global investment bank.

UBS and Commerzbank declined to comment on Wednesday’s Handelsblatt report.

On paper, a potential merger with UBS would fare better than a deal with Commerzbank as Deutsche Bank and the Swiss lender would complement each other well in the areas of investment banking and wealth management, the Handelsblatt report said.

A merger with Commerzbank, in contrast, might lead to high restructuring costs due to a large overlap, the paper said.

On Monday, Deutsche Bank Chief Executive Christian Sewing dampened speculation of a possible merger in the near term, saying the bank must focus on its homework for the next 18 months.

UBS has in the past looked askance at big takeovers, reflecting debates in Switzerland about banks being too big to fail.

Handelsblatt quoted an unnamed source as saying managers at the Deutsche Bank strategy meeting stressed that any immediate merger was “completely unrealistic.”

The German government, which owns more than 15 percent of Commerzbank, has also stoked merger speculation.

Finance Minister Olaf Scholz has said the country needs strong banks to foster exports. Some bankers privately regard that as a shift in sentiment and hints at a willingness to back the financial industry, including helping engineer a merger.

Under the merger scenario with UBS, Deutsche would be the junior partner, and the German government would have to accept that, the paper said.

Reporting by Christoph Steitz and Tom Sims; Additional reporting by Michael Shields in Zurich; Editing by Louise Heavens and Edmund Blair

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