Deutsche Bank CEO says acquisitions not a ‘priority’ as Commerzbank rumors swirl

Deutsche Bank CEO says acquisitions not a ‘priority’ as Commerzbank rumors swirl

Christian Sewing, chief executive of Deutsche Bank, has acknowledged that a recession in Germany is inevitable and urged leaders to accelerate decoupling from China.

Denis Balibouse | Reuters

Deutsche Bank CEO Christian Sewing said on Thursday that merger and acquisition activity was not a priority for his group as speculation about the domestic rival’s future resurfaced Commerzbank.

The two German lenders abandoned a merger plan in 2019, but concerns about the bank’s profitability and reports that the federal government was considering selling some of its shares in the company have renewed rumors of a possible merger in recent weeks.

The state still holds a 15% stake in Commerzbank, but Reuters reported earlier this week that Finance Minister Christian Lindner was willing to sell it.

Merging Germany’s two largest banks would create a combined company with assets worth around $2 trillion, although Deutsche Bank’s low valuation could make such a move difficult. The bank trades at around 12 euros per share, a fraction of its book value, and a significant portion of its assets would have to be written down.

Speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland, Sewing appeared to put an end to the rumors, at least for now.

“To be honest, I wouldn’t say it’s a top priority for me. I have always said for years that mergers and acquisitions in the banking sector, especially in Europe, have to happen at some point, but the most important thing for this is that certain conditions are met.” “Requirements met from a regulatory perspective, completion of the banking union,” said Sewing.

“Of course, with interest rates soaring, you have to think about fair value gaps given many banks’ mortgage books, so I don’t think that’s a priority for this year.”

Sewing from Deutsche Bank: Diversifying the business will help overcome the challenges of normalization

The European Banking Union was founded in 2014 and is intended to ensure the stability of the union’s banking and financial systems.

In December, Italy’s lower house voted against reforms to the European Stability Mechanism, the euro zone’s rescue fund, that all other euro zone countries had agreed to.

This left the bloc unable to implement part of its banking union legislation, which Eurogroup President Paschal Donohoe described as “a key element of our shared safety net”.

“That’s why we concentrate on our own business,” concludes Sewing. “If there are possibilities and options in this own business to make one or two smaller additions, like we did with Numis, then we will of course look into it.”

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2024-01-18 13:01:58