Two weak banks don't add up to one strong bank, let alone the 'national champion' the German government seems to want.
that the Eurozone superpower’s “national champion” would have about the same market value as the troubled Italian bank Unicredit. Embarrassing.
This could be a considerable relief, since the merger’s financial viability is on a knife-edge. Considerable synergies would have to be found to deliver the cost savings needed for robust profitability in the future. Unfortunately, bank mergers – especially in Germany - rarely result in realized synergies. Usually, the larger bank simply absorbs the smaller without significantly changing anything.
Fundamentally, this proposed merger isn’t about creating a robust and profitable bank. It is all about German politics. Germany would suffer considerable loss of face if its largest bank were forced into the ignominious European bank resolution procedure, with creditors bailed in and shareholders wiped. How the Italians would laugh…
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