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Deutsche Bank and Commerzbank abandon merger talks | Deutsche Bank and Commerzbank abandon merger talks |
(30 minutes later) | |
Deutsche Bank and Commerzbank have abandoned merger talks, saying the deal would have been too risky. | Deutsche Bank and Commerzbank have abandoned merger talks, saying the deal would have been too risky. |
Deutsche Bank said the deal would not have generated "sufficient benefits" to offset the costs of the deal. | Deutsche Bank said the deal would not have generated "sufficient benefits" to offset the costs of the deal. |
The German banks only entered formal merger talks last month. | The German banks only entered formal merger talks last month. |
The German government had been supporting the tie-up, with reports saying Finance Minister Olaf Sholz wanted a national champion in the banking industry. | The German government had been supporting the tie-up, with reports saying Finance Minister Olaf Sholz wanted a national champion in the banking industry. |
The government still owns a 15.5% stake in Commerzbank, acquired after the bank was bailed out following the financial crisis. | |
The deal was seen as a way of reviving the fortunes of both banks. | |
Combined, the banks would have controlled one fifth of Germany's High Street banking business with €1.8 trillion ($2tn; £1.6tn) of assets, such as loans and investments. | |
However, in a statement Deutsche Bank said managing the merger would have created additional risks and costs, which would have not been offset by the potential benefits. | |
"Deutsche Bank will continue to review all alternatives to improve long-term profitability and shareholder returns," it said. | |
Union opposition | |
Deutsche Bank has been struggling to generate growth and has been hampered by losses at its US investment banking operations. | |
Commerzbank has also found it difficult to grow. | |
Both banks are facing an economic slowdown in Germany and in the eurozone. | |
Critics of the tie-up said that combining two struggling banks would have just created one large bank with problems. | |
In addition, the deal faced opposition from unions who feared that more than 10,000 jobs would be cut. |