Deutsche Bank has confirmed it is in merger talks with rival Commerzbank, putting an end to months of speculation over a potential tie-up that stands to unsettle the German banking landscape.
While the move has been touted as a route to greater profitability for the troubled lenders, unions have warned that the merger could put up to 30,000 jobs at risk.
Deutsche Bank released a statement on Sunday confirming that “in light of arising opportunities” it had “decided to review strategic options” and was engaging with its fellow German counterpart.
Commerzbank also confirmed in a statement that the two lenders had agreed “to start discussions with an open outcome on a potential merger”.
Jan Duscheck, a representative of the German union Verdi, said 10,000 jobs were at risk in the short term, according to reports, though that number could triple over the longer term.
Deutsche Bank is one of the biggest banking employers in London, with about 7,500 staff.
The Deutsche Bank chief executive, Christian Sewing, wrote to staff on Sunday, acknowledging the months of speculation over the deal. “We have to assess opportunities as they arise. I have consistently stressed that consolidation in the German and European banking sector is an important topic for us. We have to assess how we want to play a part in shaping it,” he said.
“We, the management board, will review the options that present themselves to us carefully,” Sewing added. “It is our responsibility and it is our duty. In doing so, we will keep the interests of the bank and all of our stakeholders in mind.”
He cautioned that talks may not lead to a successful merger. “At this point in time, there is no certainty at all that any transaction will materialise. Experience has shown that there may be a lot of potential economic and technical factors that could hinder or prevent such a step.
“In the meantime, I would ask you to focus on your daily business and to be there for our clients.”
Shares in the two banks rose higher on Monday, with Commerzbank climbing 6.2% and Deutsche Bank, 3.3%.
Analysts at Barclays warned that while the “status quo is not sustainable in the long term” for Deutsche Bank, a Commerzbank tie-up would not be a quick fix.
“Merging with Commerzbank could realise some cost synergies” and increase the bank’s footprint in Germany, Barclays said. “Nevertheless, this would involve significant execution risk and the benefits might not be apparent for many years.”