Deutsche Bank is preparing for a possible merger of the government with a Commerzbank competitor by the middle of the year, as it is time to reverse the results for the largest bank in Germany, Bloomberg reports.
Managers who are preparing to announce results for the difficult fourth quarter of Friday are worried that such an agreement may continue to be their only opportunity if it is not improved in the first three months of 2019. The bank warned that the last months of last year were affected by a police operation in November that complicated the market environment.
The CEO, Christian Schwing, called for patience for his current plan, focusing on reducing spending and stepping up efforts to stabilize the market share, but conversations between the borrower and the government have recently increased. Years of restructuring failed left the bank with a drop in revenue that can hardly be reversed. This stimulated the speculation that it will soon be forced to merge with Commerzbank in an effort to increase the market share and reduce costs in a competitive and highly competitive domestic market.
Although the largest investors of the bank continue to support Shuiing, they are not satisfied with the losses they have suffered, according to people familiar with the matter. The shares lost more than half its value last year before recovering some of these declines this year.
"If that is true, the economic situation of the Deutsche Bank should be worse than the outside world," said Andreas Plaseier, an analyst at M. M. Warburg. "A merger with Commerzbank at this time makes no sense because it offers few opportunities to achieve customer growth."
While the deal is perceived by some as an inadequate decision, the German government believes it would be impossible for Schwing to make it impossible for the bank, before a possible economic downturn, to exacerbate the situation, say that people are familiar with the government's position. Berlin reduced its economic growth forecast this year on Wednesday to only 1%, which will be the slowest pace in six years.
The country still has a large part in the Commerzbank a ransom. He has no participation in Deutsche Bank, but Finance Minister Olaf Scholz has repeatedly stated that he wants big international banks to support German export-oriented companies.
Representatives of the largest German bank have held 23 discussions with officials in Berlin since the formation of the new government in March, most of them with Deputy Finance Minister Jorg Koukis.
Schwing excludes the possibility of mergers before 2020, but also says that you will need to change your strategy before your plan fails. Many employees of Deutsche Bank and the German government have approved a merger with Commerzbank as the best option.
Analysts interviewed by the bank expect an eighth consecutive decline in fourth quarter bank earnings.
However, the bank can rely on at least one majority shareholder. Deutsche Bank has negotiated a commitment with new investors in Qatar, which already has significant stakes in the bank. The new investment is probably made through the state fund.