Deutsche Bank considering a merger with UBS

Speculation is rife on Deutsche’s potential merger with either UBS or Commerzbank. Deutsche’s CEO Christian Sewing has however dampened speculation of any potential merger for at least the next 3 years.

On Wednesday, German business daily Handelsblatt reported citing sources familiar with the matter at hand as saying, Deutsche Bank, Germany’s biggest lender, has looked at a theoretical scenario of merging with UBS.

According to its report, the scenario, along with a potential merger with Commerzbank was discussed at the bank’s strategy meeting with the supervisory board earlier this month.

Theoretically, Deutsche Bank’s merger with UBS looks better than a deal with Commerzbank; their synergies complement each other, especially in the areas of wealth management and investment banking.

In contrast, a merger with Commerzbank could lead to higher restructuring costs due to the large overlap, said Handelsblatt.

Deutsche Bank declined to comment on the report.

Earlier this week, on Monday, Deutsche Bank CEO Christian Sewing threw cold water on the fervent speculation of a potential merger, when he said, Deutsche must focus on its homework for the next 18 months.

Earlier this month, German news magazine Der Spiegel had reported, executives from Deutsche Bank and Commerzbank are increasingly open to the idea of a merger.

The German government, which owns more than 15 percent of Commerzbank, has stoked merger speculation with Olaf Scholz, Germany’s finance minister saying, Germany 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 through policies like engineering a merger.

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