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Towards A Kolossal Bank?

11 September 2018 by lberuti

Many have been thinking that the global dominance of US banks in the era of Donald Trump should stir Europe’s banks into joining forces and gaining scale. Many names have been flying around over the last few months. UCGIM ( UniCredit SpA ) was said in June to be weighing a deal with SOCGEN ( Societe Generale SA ) and would now be considering BBVA ( Banco Bilbao Vizcaya Argentaria SA ) as a potential target. Today another rumour gained traction, as it was reported in Der Spiegel that the German government would be open to tie-up between CMZB ( Commerzbank AG) – in which it still holds a 15.5% stake - and DB (Deutsche Bank AG). Speculation about the two banks merging has been bubbling over the last few months after DB’s Supervisory Board Chairman was said to have discussed the idea with German officials. Even if DB is still in the process of integrating Postbank and if its CEO said internally that a merger would not happen in the next 18 months, investors gave the story enough credit to push DB’s 5-year risk premium 7bps tighter at 123bps and CMZB’s 4bps wider at 78bps, initiating a potential convergence process which made them respectively the best and worst performer among European banks today.