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Deutsche Bank Is Wary of Commerzbank's Loan Book in Merger

  • Revaluation could potentially require need for extra capital
  • Two banks currently in talks on conditions for potential deal
A Commerzbank bank branch stands on Rossmarkt Square in Frankfurt.

A Commerzbank bank branch stands on Rossmarkt Square in Frankfurt.

Photographer: Jasper Juinen/Bloomberg

Updated on

Deutsche Bank AG is wary of Commerzbank AG’s credit quality as merger talks commence, assessing whether the smaller rival has been rigorous enough in handing out loans, said people familiar with the matter.

Deutsche Bank may be forced to write down Commerzbank’s loans after a tie-up if the larger lender applies tougher risk models, potentially creating the need for additional capital, the people said, asking not to be identified discussing the private deliberations. It’s not yet clear how much capital such a revaluation would require, they said.