FRANKFURT (Reuters) – Germany’s Verdi labor union on Tuesday objected strongly to a possible merger between Deutsche Bank and Commerzbank, arguing that the merged group would be a more attractive target for a hostile foreign takeover.
FILE PHOTO: Banners of Deutsche Bank and Commerzbank are pictured in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, September 30, 2016. REUTERS/Kai Pfaffenbach
The union also said in a statement to Reuters that Deutsche’s problem investment bank, would not be helped by a tie-up with Commerzbank. A merger would put at least 10,000 jobs at risk, it added.
“We reject a merger,” said Jan Duscheck, head of Verdi’s banking division.
It wouldn’t create a truly big bank in the European market, and the new entity would be “considerably more attractive for a hostile takeover, for example, by France,” he said.
“The merger would not result in a ‘national champion’,” he added.
The union’s reaction follows news over the weekend that Deutsche Bank’s chief executive Christian Sewing had agreed to hold tentative talks with rival Commerzbank.
Berlin, which has been worried about Deutsche’s health, has pushed for a merger as Deutsche has struggled to generate sustainable profits since the 2008 financial crisis.
On Monday, German Finance Minister Olaf Scholz confirmed that the banks were exploring a possible merger after weeks of media speculation.
Both banks declined to comment.
Verdi is among Germany’s largest unions, representing 2 million workers across a range of industries. The union is calling for a 6 percent wage increase for 200,000 workers that it represents in state and publicly-listed banks.
The union has two seats on Deutsche’s supervisory board and two seats on Commerzbank’s board. Duscheck sits on Deutsche’s board.
Verdi had already flagged its opposition to a possible merger.
Some major shareholders are also worried about a tie-up, doubting that such a combination would guarantee higher returns, people familiar with the matter said.
Otto Fricke, a member of German parliament and the business-friendly FDP party, on Tuesday criticized Scholz for feeding merger speculation and increasing pressure on the two banks unnecessarily.
Fricke, speaking to Reuters, said the decision should be left “to the companies as it should be in a social market economy.”
Shares of both banks rose sharply on Monday but lost ground on Tuesday, with Deutsche down 2.6 percent and Commerzbank 2.5 percent by early afternoon.
Reporting by Tom Sims in Frankfurt and Michael Nienaber in Berlin; editing by Louise Heavens/Riham Alkousaa/Jane Merriman