- Executives decided to halt talks pending banks’ revamps
- Combination would improve lenders’ ability to compete
Deutsche Bank AG and Commerzbank AG executives held talks about a potential merger earlier in August but decided against pursuing a transaction as the companies focus on restructuring their own businesses first, according to a person familiar with the discussions.
Exploratory talks involved Deutsche Bank Chief Executive Officer John Cryan and his counterpart at Commerzbank, Martin Zielke, said the person, who asked not to be identified because the deliberations were private. Deutsche Bank Chief Financial Officer Marcus Schenck led a group of executives examining the plan, the person said.
A combination would see Germany’s top two banks combining their consumer businesses, with the opportunity to cut costs, and create a bigger European lender that would be able to compete more effectively, according to the person. Both banks decided to focus on their internal reorganizations before revisiting a potential deal, the person said.
Spokesmen for Deutsche Bank and Commerzbank declined to comment.
Manager Magazin earlier reported Deutsche Bank explored a merger with Commerzbank, without saying where it obtained the information.
Responding to the report, Cryan on Wednesday told executives at a conference hosted by Handelsblatt newspaper in Frankfurt that he’s not looking for a tie-up and is instead trying to shrink the company.
“No,” Cryan, 55, said when asked whether the German lender is looking for a partner. “Part of the work we’re doing is to make our bank a bit smaller, to make it a bit simpler.”
Germany’s largest lender has said that it may not be profitable in 2016 while Commerzbank earlier this month forecast a drop in full-year net income. Deutsche Bank’s shares have dropped 42 percent this year and Commerzbank fell 34 percent.