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Deutsche Bank CEO says sector needs more mergers

Reuters with
Deutsche Bank CEO pushes for bank mergers

Europe needs to see more banking mergers for the sector to be in position to become more profitable, Deutsche Bank Chief Executive John Cryan said on Wednesday, amid a report Germany's biggest lender had looked at No. 2 player Commerzbank.

Europe's efforts to create a banking union and unify its capital markets will help to end scattered regionalism among banks, Cryan said at a banking conference.

"We need more mergers, at a national level, but even also across national borders," Cryan said.

Commerzbank rose around 4 percent, making it the top gainer in the STOXX 600, after Germany's Manager Magazin reported in its online edition that Deutsche Bank had in the past considered the idea of a merger with Commerzbank.

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The report indicated that Deutsche Bank had considered a variety of options and reported there was an idea of a merger with Commerzbank, although stipulated that it was merely theoretical.

This isn't the first time that such a merger has been mentioned. European banks are still adjusting from the sovereign debt crisis of 2011 and consolidation is a likely part of any rebuilding stage in any sector. Banks in the euro zone have been hit by a lack of yield with easy monetary policy having an impact on revenues.

Last month, Deutsche Bank announced second-quarter net income was down 98 percent from the same period in the previous year. The bank, one of Germany's largest lenders, has lost around 40 percent of its market value this year as concerns mount about its capital position and $14 billion in fines over past misconduct.

Meanwhile, Commerzbank shares tanked 8 percent in early August when it warned of further pressures on its 2016 revenues.

Neither bank has commented on the Manager Magazin article.