S&P talks about 'damage' after Commerzbank-Deutsche Bank merger talks collapse

After Deutsche Bank and Commerzbank ended merger talks due to the risks of doing a deal, restructuring costs and capital demands, S&P has revealed their views on the situation. S&P said that "Commerzbank is somewhat less challenged than Deutsche Bank, although our negative outlook on Commerzbank continues to reflect downside risks," as per a news brief posted by Reuters.

Germany's two largest banks announced yesterday that nearly six weeks of high-level negotiations about a tie-up had ended in failure.

While talking about Deutsche bank, S&P said that "We consider that Deutsche bank has acknowledged that it may need to take further strategic actions to achieve its longer-term objective of adequately covering its cost of capital."

"In our view, Deutsche bank will remain under strain until it starts to close in on this objective," the global financial services company added.

S&P also said that both (Deutsche Bank and Commerzbank) management teams remain under pressure to build investor confidence in their stand-alone business models' ability to combat their key weaknesses.