Market Overview

Deutsche Bank CEO Open To Merger Talks If Profitability Improves In Early 2021: Report

Deutsche Bank CEO Open To Merger Talks If Profitability Improves In Early 2021: Report

Deutsche Bank AG (NYSE: DB) CEO Christian Sewing claimed that the four-year strategic turnaround plan is the first priority for the German bank, but didn't rule out a merger early next year. According to Bloomberg, a takeover deal could be in the cards only if the bank’s profitability improves in 2021.

What Happened: Sewing remarked in a Bloomberg interview that he would not want the bank to be a target of a takeover transaction. But an increase in share price or profitability figures could place Deutsche Bank in “a better position” to negotiate. The German bank's CFO James von Moltke hinted that it is also open to cross-border mergers, as reported by Bloomberg last month.

The pandemic outbreak has forced European banks to revisit their branch banking strategies. In September, Deutsche Bank decided to close one out of five branches in Germany, reducing its presence to around 400 units, Reuters reported.

Why Does It Matter: Executives from leading European investment banks, including Von Moltke, believe that the European banking sector is due for consolidation and the markets would witness more takeover agreements.  

In September, CaixaBank S.A. (OTC: CAIXY) and Bankia SA created the biggest bank in Spain through a merger deal. Whereas in July, Italian bank Unione di Banche Italiane S.p.A (UBI Banca) was subject to a hostile takeover by Intesa Sanpaolo Spa (OTC: ISNPY), the Financial Times reported.

Price Action: DB stock gained 2.35% during Monday’s trading hours to close at $8.70.

Photo courtesy: Deutsche Bank via Flickr


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