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“The emergence of true European champions hinges on a unified regulation in Europe, a single financial market,” Christian Sewing said at a banking conference in Frankfurt organised by German financial daily Handelsblatt, adding that the pressure to consolidate for banks will accelerate.
For many years Deutsche has been at the centre of merger speculation, and some observers see a tie-up with Germany’s second-largest lender Commerzbank as a question of when, not if.
Both Mr Sewing and Commerzbank’s chief executive Martin Zielke declined to comment about a possible tie-up of their respective banks. Mr Zielke stressed that a lender’s future success primarily depends on its ability to be nimble and change itself quickly. “Size in itself is surely no differentiator,” he said.
Stuart Graham, chief executive of London-based Autonomous Research, was highly sceptical that a merger of both lenders could be successful, arguing that the record of previous banking mergers in Germany was not good.
He stressed that the woes of Germany’s listed lenders are deeply rooted in the wider structure of the country’s financial sector, which is dominated by small regional lenders that are not maximising profit. “A merger [of Deutsche and Commerzbank] does not alter this in a fundamental way,” said Mr Graham.
Mr Sewing argued that “Europe does not need as many banks as possible, Europe first and foremost needs strong banks”, adding that Deutsche despite its restructuring has not lost its ambition to be a global corporate and investment bank. “Under my leadership, this aspiration won’t be questioned,” he said.
Mr Sewing said that in times of transatlantic tensions, Europe should not rely solely on a few non-European banks, pointing to lessons learnt during the financial crisis a decade ago. “Back then, foreign banks cut their lending significantly more than domestic ones,” he pointed out.
Full article on Financial Times (subscription required)