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Tuesday, May 21, 2024

CEO of Deutsche Bank Downplays Acquisitions Amid Speculation About Commerzbank Integration



Christian Sewing, the CEO of Deutsche Bank, recently acknowledged that a recession in Germany is inevitable, and has urged leaders to accelerate its decoupling from China. This is a big concern, and it’s important for us to pay attention.

But in the midst of this, there has been a lot of talk about possible mergers and acquisitions among German banks, particularly involving Deutsche Bank and Commerzbank. However, Sewing has made it clear that this is not a priority for his group right now. There are a lot of rumors and speculation swirling around, but for now it doesn’t seem like this is something that is going to happen anytime soon.

The state still has a 15% stake in Commerzbank, but there are reports that the German government is considering selling some of its company stakes. This has rekindled rumors about a possible tie-up between the two banks. However, there are concerns about bank profitability and how this would all play out, given that Deutsche Bank’s current valuation could complicate any potential merger. Right now, the bank trades at around 12 euros per share, which is just a fraction of its book value, so a significant portion of assets would need to be marked down.

Speaking from Davos, Switzerland, Sewing said, “I wouldn’t say it’s on top of my priority, to be honest. I have always said for years that M&A in the banking industry, particularly in Europe, must come at some time, but most important for that is that certain preconditions are met — preconditions from a regulatory point of view, finalization of the banking union. Obviously, with regard to the sharply increased interest rates, you have to think about fair value gaps given the mortgage books of a lot of banks, so I don’t think it is a priority for this year.”

The European Banking Union was created in 2014 and seeks to ensure the bloc’s banking and financial systems are stable. However, in December, Italy’s lower house of parliament voted down reforms to the European Stability Mechanism, which had been approved by all other euro zone countries. This left the bloc unable to implement a portion of its banking union legislation described by Eurogroup President Paschal Donohoe as “a key element of our common safety net.”

Sewing also added, “Therefore, we are focusing on our own business. If, in this own business, there are possibilities and options for doing the one or the other smaller add-ons, like we have done with Numis, then obviously we are looking at it.”

In the end, it seems like mergers and acquisitions are not a priority for Deutsche Bank right now. There are a lot of factors at play, and it’s understandable that they would want to focus on their own business first. Let’s keep an eye on the situation and see how it develops. The economy is always changing, and it’s important for us to stay informed and be aware of what’s happening.

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