Market Overview

Pro: Citigroup Should Acquire Deutsche Bank

Pro: Citigroup Should Acquire Deutsche Bank

German bank Deutsche Bank AG (NYSE: DB) saw its shares sink to a record low in reaction to nearly 200 law enforcement officials raiding its headquarters as part of a money laundering investigation.

One of the options available for Deutsche Bank moving forward is to sell itself to a larger bank peer, said Whalen Global Advisors' Chris Whalen.

What Happened

Deutsche Bank is at its core a capital markets and investment banking institution with a consumer-facing bank in Germany and across Europe, Whalen said during CNBC's "Worldwide Exchange" segment Monday. Deutsche Bank's board remains "passive" in dealing with its problems and has not forced any change while shareholder value continues to erode, he said. 

Why It's Important

Citigroup (NYSE: C) operates a "relatively weak" capital markets business but also boasts a "nice consumer book" with a global payments business, Whalen said. This creates a scenario where Citi acquiring Deutsche would make some sense, as European banks as a whole are undercapitalized and don't make money — while American banks have "more capital than we need," he said. 

"I would have [Citi] buy [Deutsche Bank] and have Citi as a successor brand." 

What's Next

Deutsche Bank needs a "new anchored tenant" that is willing to introduce and enact a new strategy, in the pro's view. It remains to be seen if a global banking merger of this size will take place, he said, but if action isn't taken, European bank regulators may soon get involved in some form.

Related Links:

Analyst Says Things Could Get Worse For Deutsche Bank's Stock

A Concerning Weakness In Bank Stocks

Posted-In: banks Chris Whalen CNBC European banks Whalen Global AdvisorsMedia Best of Benzinga


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