Merger speculation boosts shares in Deutsche and Commerzbank By Reuters

© Reuters. FILE PHOTO: Martin Zielke, CEO of Germany’s Commerzbank addresses the media during the bank’s annual news conference in Frankfurt

FRANKFURT (Reuters) – Shares in Deutsche Bank (DE:) and Commerzbank (DE:) traded higher on Monday as German business warmed to the prospect of a tie-up between the country’s two largest banks.

Berlin has pressed Deutsche to come up with a long-term plan after it struggled to generate sustainable profits after the 2008 financial crisis which resulted in Germany’s largest lender paying billions in penalties and fines.

Berlin based BGA, the Federation of German wholesale, foreign trade and services, which represents large and mid-sized export businesses said a merger could make sense if it resulted in one German player surviving in the longer run.

Tougher rules and low interest rates have made it more difficult to find banks willing to provide German companies with export credit.

“It is getting harder for companies to find a partner who can provide funding,” BGA President Holger Bingmann said.

“The business model of banks has come under pressure, and we would be glad if in the long run, to have at least one global player as a partner for our international business.”

Deutsche Bank’s chief executive has agreed to hold tentative talks with local rival Commerzbank, a person with knowledge of the matter told Reuters on Saturday.

Germany’s Welt am Sonntag newspaper had been the first to report on the early stage merger talks and said Berlin politicians expect a decision in the coming weeks.

Deutsche and Commerzbank declined to comment on the prospects of a merger.

A person familiar with the matter said last month that U.S. investor Cerberus Capital Management, a major shareholder in both Deutsche Bank and Commerzbank, was open to a merger, increasing the chances of a tie-up.

However, others are still to be convinced of the merits of a deal.

“We’re still against such a merger,” a person close to a major Deutsche Bank shareholder said on Monday.

Deutsche Bank shares were up 1.7 percent higher while Commerzbank shares were 4.1 percent higher at 1005 GMT, outperforming Germany’s blue-chip which was 0.2 percent higher.

Proponents of a merger say that a tie-up would give a combined entity — which would have an equity market value of more than 24 billion euros ($27 billion) based on Friday’s closing share prices — a 20 percent share of the German retail banking market.

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