The head of German Bank said to merge with Commerzbank is not a priority.
In a interview with CNBC Thursday (January 18), CEO of Deutsche Bank Christian Sewing appeared to refute recent – and unconfirmed – reports that his company was in talks to merge with another German financial institution, Commerzbank.
“I wouldn’t say it’s my priority, to be honest. I have always said for years that mergers and acquisitions in the banking sector, especially in Europe, must take place at some point, but the most important thing for this is that certain preconditions are met – preconditions of a regulatory point of view, finalization of the banking union. he said.
“Obviously, when it comes to the sharp rise in interest rates, you have to think about the fair value spreads given the mortgage portfolios of many banks. So I don’t think that’s a priority for this year,” added Sewing, who was interviewed at the World Economic Forum in Davos, Switzerland.
The CNBC report notes that a merger of the two banks – Germany’s largest – could create a combined company with around $2 trillion in assets.
A Reuters report earlier this week indicated that the two banks had merger negotiations resume after canceling its regrouping project five years ago. The report said uncertainty in the banking sector and the need for the German government – which owns part of Commerzbank – to consolidate its budget had reignited speculation about a merger.
A source told Reuters that the merger with Commerzbank would allow Deutsche Bank to further distance itself from the investment bank’s bottom line, strengthening its long-term stability and making it a more attractive buyer in the eyes of the German government.
As we highlighted late last year, the European Central Bank has slowed the pace of interest rate increases, leading to greater competition for deposits and investments. force the lenders to increase what they pay to attract new savers.
Increasing fee income will be “a focal point of our growth initiative” over the coming years, Bettina Orlopp, Commerzbank’s chief financial officer, told Bloomberg News, adding that the bank was focused on growing its asset and wealth management units.
“Many other European banks are following suit, using their recent results presentations to signal to investors that they are spending on aspects of their businesses that do not rely on loan income – such as insurance, private banking and payments – as they expect interest income to increase,” PYMNTS wrote earlier this week.
