REPORT: Deutsche Bank has discussed plans for a merger with Swiss giant UBS

REPORT: Deutsche Bank has discussed plans for a merger with Swiss giant UBS

Deutsche Bank has made plans for a potential merger with Swiss banking giant UBS, a report from German newspaper Handelsblatt said on Wednesday.

Citing people familiar with the matter, Handelsblatt said that senior Deutsche Bank staff discussed the possibility for a tie-up with UBS — which would combine the biggest lenders in Germany and Switzerland — at a strategy meeting earlier in September.

The discussions were part of a meeting in which the bank’s supervisory board also discussed a long-vaunted merger with Commerzbank, Germany’s second-biggest bank and one of Deutsche Bank’s key domestic rivals.

Speculation that Deutsche Bank may merge with Commerzbank, its German rival, has swirled for years in the market, but neither side has commented. Bloomberg reported in June that Deutsche Bank’s board spoke with shareholders and the government privately about a potential deal.

However, Handelsblatt says, executives were keen to stress that a merger with UBS would make more sense and be a better match. “Deutsche Bank and UBS would complement each other well with their different strengths in investment banking and asset management,” Handelsblatt said, citing insiders at the bank.

While Deutsche Bank’s supervisory board discussed a potential tie-up, there is no indication that any talks have started between the two banks, or even that Deutsche Bank is actually planning an approach to UBS.

Deutsche Bank declined to comment when contacted by Business Insider. UBS did not immediately reply to a request for comment.

The report is the latest in long list of rumours about possible partners or targets for Germany’s largest bank. In July, for example, the German magazine WirtschaftsWoche reported that JPMorgan and Industrial and Commercial Bank of China could be interested buying a stake, citing unnamed sources in German regional government. JPMorgan denied that report.

Reports of discussions about a merger with UBS come just months after the ousting of Deutsche Bank’s CEO John Cryan earlier in the year. Cryan was replaced by long-serving bank insider Christian Sewing in April.

Soon after his appointment, Sewing announced plans to scale back US operations and cut jobs.

Speculation about a merger with another institution in part reflect the numerous troubled patches the bank has encountered in recent years. These include:

  • Three consecutive years of full-year losses. Deutsche Bank in February reported a full-year loss of €497 million ($586 million) for 2017.
  • The bank’s US operations have been deemed “troubled” by regulators.
  • An investigation by the US Justice Department both for its role in a “ mirror trading” scheme with Russian oligarchs that allowed them to launder cash out of Russia in the face of US sanctions and for its mortgage practices amid the financial crisis, for which regulators sought a $14 billion fine.
  • The mortgage issues eventually led Deutsche Bank to pay a $7.2 billion fine to the US.
  • Chinese conglomerate HNA, one of the bank’s biggest shareholders, is reportedly planning to sell down its stake.

Sewing has previously indicated publicly that Deutsche Bank would be willing to explore a merger, but only after the bank is profitable again.

“We have a very clear plan to remain a global bank, but we have to work on profitability now,” Sewing said at an event in Berlin on Monday.

“If that happens, we can talk about other things.”

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