FRANKFURT (Reuters) - Berlin is so worried about the health of Deutsche Bank that it pushed for a merger with rival Commerzbank even though it could open up a huge financial shortfall, a German official told Reuters.
Deutsche Bank’s management board has agreed to hold talks with Commerzbank about the feasibility of a merger. The state owns a 15 percent stake of Commerzbank and is expected to be a shareholder in the new group.
The German official said that any tie-up would likely result in a multi-billion-euro hole because a switch in bank ownership legally triggers a revaluation of assets such as government bonds.
They would be revalued at a market price which is typically lower than the one registered on the accounts. A second source, who is familiar with the talks, said they also expected a shortfall after the potential merger.
Rating agency Moody’s has said that a takeover could result in a “downward valuation adjustment for parts of Commerzbank’s asset base”.
A second German official said Deutsche’s future was in question because high costs left it with little profit. Asked about a merger between the two banks, a third official said one was urgently needed to reduce the number of branches in an overcrowded market.
Both said a buoyant jobs market in Germany made it easier to make staff cuts without prompting large protests because those employees would be easily able to find other work.
Spokespeople for both banks, the German finance ministry and the economy ministry declined to comment for this story.
Deutsche Bank has said it is stable. Last month, as
