Apr 28, 2019

Deutsche extends losing streak as Commerzbank merger talks collapse

Felix Salmon, author of Edge

Deutsche Bank doesn't look like much of a national champion these days. It cut its revenue guidance this week, its investment bank is shrinking, and it has thrown in the towel on merger talks with Commerzbank.

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Data: FactSet; Chart: Axios Visuals

Between the lines: Commerzbank has other suitors waiting in the wings, including ING and UniCredit — but Deutsche is too big to be acquired.

  • Deutsche has $1.54 trillion of assets and a market value of just $15 billion. By contrast, Wells Fargo has $1.89 trillion of assets and a market value of $216 billion.
  • Both Deutsche and Commerzbank are trading at a deep discount to their respective book values — but Commerzbank's valuation has been improving this year amid takeover talk. Deutsche, by contrast, is hitting new lows, with its shares worth just 24 cents on every dollar of book value as of the close of trade on Friday.

What’s next? If Deutsche Bank CEO Christian Sewing has a Plan B, he's keeping it close to his chest. The most likely outcome is that Deutsche will continue to shrink by cutting back on investment banking and possibly by selling off its asset-management arm, DWS.

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