Deutsche Bank was in talks with German govt before merger deal with Commerzbank: SourcesDevdiscourse News Desk | Updated: 09-04-2019 22:50 IST | Created: 09-04-2019 22:25 IST
Deutsche Bank's Chief Executive had a series of meetings with Germany's deputy finance minister before and immediately after it announced merger talks with a state-backed rival, according to information revealed by the government. The contact underscores the attention Germany's finance ministry has given to the country's largest bank at a critical juncture that will determine whether the state becomes a shareholder in the group.
In a letter answering a question from a German lawmaker, seen by Reuters, the government said Deutsche CEO Christian Sewing had met three times this year with Germany's deputy finance minister, Joerg Kukies. Two of those meetings happened in January, while the third was on March 18, the day after Deutsche and Commerzbank publicly confirmed they were in talks about a possible merger.
Fabio De Masi, the leftist lawmaker who made the information request, said the meetings showed finance minister Olaf Scholz, and his deputy, had been important in influencing talks, even though they have sought to distance themselves. "In reality, Scholz and Kukies hold the key," he said, adding a merger would be a risk for taxpayers and cost thousands of jobs. "A banking champion is a dangerous idea. Putting two turkeys together won't produce an eagle."
A spokesman for the finance ministry said Kukies meets "with many representatives of banks ... on numerous occasions" because of his job, and declined to comment on the merger talks. Deutsche Bank declined to comment. Deutsche Bank's exploratory talks with Commerzbank come after prodding by Germany's finance ministry, which is worried about the future of the country's biggest bank.
Any deal would see Berlin become a shareholder in the combined group, which one German official said would need up to 10 billion euros ($11 billion) of fresh capital because of restructuring costs and the fact losses on investments could be triggered. Through its stake in Commerzbank, the German government would become a top shareholder in a merged group, playing a central role in any fusion. Lawmakers fear this puts it on the hook to shoulder losses if the bank later runs into trouble. Berlin could yet pull the plug if it believes a deal would be politically unpalatable. ($1 = 0.8869 euros)