Deutsche Bank confirms merger talks with Commerzbank

The two banks confirmed the move to deeper discussions in separate statements, capping months of speculation and behind-the-scenes talks with the Finance Ministry. Both companies have struggled to restore revenue growth after deep cuts to their investment banking units.

The banks agreed to start formal talks after the government signaled it wouldn’t stand in the way of necessary job and cost cuts, people familiar with the matter said. Deutsche Bank expects to spend the month of April 2019 in negotiations, according to bank briefings.

While it’s not clear how a merger would be structured, Deutsche Bank is the larger of the two and would probably be the acquirer. If a deal goes ahead, it may need to raise about EUR 8 billion from shareholders or through sales of holdings such as its DWS Group asset management business, according to an estimate by Christian Koch, a DZ Bank analyst.