Financial Sector Opposes Merger of Deutsche Bank and Commerzbank

The possible merger of Deutsche Bank and Commerzbank, which is currently the subject of intensive debate, is facing considerable resistance from the majority of financial market experts. This does, however, not mean that the creation of a large German bank is generally rejected. Slightly more than half of the experts are convinced that the German economy needs a large German bank with global reach. This is the result of a special question featured in the most recent ZEW Financial Market Survey conducted by the ZEW – Leibniz Centre for European Economic Research in Mannheim among 174 financial market experts in March 2019.

The financial market experts surveyed by ZEW view a merger between Commerzbank and Deutsche Bank in a critical light. Merely 15 per cent of the respondents confirmed that this merger would bring benefits for the German financial system. By contrast, almost 65 per cent did not agree with this statement, whereas 20 per cent of the experts expect this merger to have neither positive nor negative effects on the financial system.

There are two factors that explain this attitude towards the merger. First, a majority of the financial market experts believe that the merger of Deutsche Bank and Commerzbank would not create any significant economies of scale that would increase the competitiveness of this newly created major bank. Almost 55 per cent of the respondents do not believe that this new bank would be more competitive on an international scale. On the other hand, almost 80 per cent of survey participants fear an increase in systemic risk should a merger occur. Only nine per cent of respondents do not see this risk.

“According to the surveyed financial market experts, the disadvantages of the merger between Deutsche Bank and Commerzbank – which is complicated and expensive to implement – clearly outweigh the benefits. This merger is also likely to increase systemic risk, which should be considered when creating a new major bank,” explains ZEW President Professor Achim Wambach.

The majority of respondents, however, do not oppose the creation of large banks per se. More than half of the experts agreed that the German economy is currently in need of a large German bank, whereas 31 per cent did not agree with this statement.