Germany's Plan to Fix Deutsche Bank Has a Troubled History
- Combining two weak banks doesn’t make strong one, critics say
- Yet officials are examining a possible merger with Commerzbank
Germany is examining whether it can fix its two largest lenders -- Deutsche Bank AG and Commerzbank AG -- by combining them into a national champion that’s once again able to challenge foreign rivals. History suggests it’s a recipe for more trouble.
Spain encouraged the merger of seven failed savings banks into Bankia SA in 2010, only to bail out the combined entity two years later when it collapsed. The U.K. pressed Lloyds Banking Group Plc to swallow failing HBOS Plc in 2008 and a month later had to rescue Lloyds. The U.S. government’s enthusiasm for Bank of America Corp.’s takeover of Merrill Lynch around the same time ended with two bailouts in four months. Greek officials pushed for tie-ups of troubled banks during the sovereign-debt crisis, only to be blocked by wary international administrators of the nation’s rescue program.