From rob1cox via Breakingviews: Really, no one else will bid for Commerzbank except Deutsche Bank?
LONDON - Berlin has blessed the potential union of Deutsche Bank and Commerzbank to create a German national champion in financial services. Conventional wisdom holds that the official sanction from the Bundesregierung makes a marriage between the two challenged institutions a done deal. But it’s precisely this sort of statist logic that keeps Europe from developing more globally competitive businesses.
Though the smaller of the two Frankfurt-based banks is struggling to generate an adequate return on equity, it offers numerous charms to a host of European peers, some of which are better capitalised and more effectively run. Among them are ING Groep, UniCredit, Banco Santander and BNP Paribas.
Then there are the specific attractions to different potential buyers. Take ING, the largest Dutch lender, whose largely online incursion has made it a top 10 player in Germany with nearly 150 billion euros of customer deposits. A deal would therefore offer some cost savings – if not on the quantum of a sale to Deutsche – and vault the combo to the second spot among all banks in the country.
And there’s another possible – if currently unquantifiable – benefit should UniCredit decide to move its head office: lower funding costs. Italian banks suffer when the sovereign, which determines the cost of borrowing for all Italian entities, is treated as a pariah by bond investors. Italy now pays around 260 basis points more for 10-year money than Germany to compensate for a higher perceived risk of default.
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