Deutsche Bank Merger Looks Real, and It’s Scary

It’s one of the most talked-about mergers, and one most think only works on paper: marrying Deutsche Bank AG with its smaller competitor Commerzbank AG to create a German champion. If it’s actually happening, investors should worry.

Both lenders’ stock fell on Thursday after Bloomberg News reported that the government-brokered combination could happen by mid-year. That negative reaction shouldn’t be a surprise. The deal looks like the option of last resort. Combining two of Europe’s most inefficient banks to create an even bigger supertanker would require tens of thousands of job cuts and a risky (read costly) integration to stand a chance of working.