Christian Sewing, the Chief Executive Officer (CEO) of Deutsche Bank, is viewing a potential merger with rival Commerzbank positively and believes there is a strong case for such a move, according to a report from Reuters which cites a person with direct knowledge of his thinking.
Today, a meeting of Deutsche Bank’s supervisory board will take place. As Finance Magnates previously reported, the possible merger has faced strong pushback from supervisory board members, with labor representatives on Deutsche’s oversight body opposing the deal, according to reports.
Specifically, Jan Duscheck and Stephan Szukalski told Bloomberg that a merger between the two German banks would result in 30,000 job losses. Furthermore, the labor representatives argued that a merger would actually make the two banks weaker, which defeats the purpose of any deal between them.
There will be jobs cuts regardless of whether Deutsche Bank and Commerzbank combine, the source told Reuters. However, Deutsche’s CEO believes that the merger could produce multiple benefits, with one of them being a “clear” dominance of the German market. Other benefits include scale and shared technology costs, the source said.
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Furthermore, Sewing believes that the combination of the two firms would improve the cost of funding, “the best funding ever,” the person said.
Rumors of the possible merger first surfaced in January following consistently weak results and a number of scandals from Deutsche Bank. The main reason for the merger is that German officials don’t believe Sewing can turn the bank around.
Deutsche Bank Seeks Assurances from Chancellor Angela Merkel
Earlier this month, reports surfaced that Deutsche was seeking assurances from Chancellor Angela Merkel that it will receive government backing if it moves forward with the possible merger.
So far, the chancellor has remained on the sidelines, but due to the fact that the government owns 15 percent of Commerzbank, if the deal is to go ahead, Merkel will eventually have to make a decision one way or the other.