FRANKFURT, April 25 (WNM staff) - Merger talks between Germany’s top two lenders, Deutsche Bank and Commerzbank, have ended in failure, the companies announced.

Deutsche Bank and Commerzbank have rejected a merger of the two financial institutions. After a thorough examination, the boards of the two banks have come to the conclusion that a merger with Commerzbank would not offer sufficient added value, Deutsche Bank and Commerzbank announced on Thursday..

Deutsche's statement:

After careful analysis, the Management Board of Deutsche Bank has concluded today that a combination with Commerzbank would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration. As a result, the two banks have decided to discontinue discussions.

 Deutsche Bank will continue to review all alternatives to improve long-term profitability and shareholder returns.

 For the first quarter of 2019, Deutsche Bank expects to report income before income taxes of approximately EUR 290 million and net income of approximately EUR 200 million. Total net revenues are expected to be EUR 6.4 billion, including EUR 3.3 billion in the Corporate & Investment Bank with total noninterest expenses and adjusted costs in each case of EUR 5.9 billion. The Common Equity Tier 1 ratio at the end of the quarter is expected to be approximately 13.7 percent.

 Deutsche Bank will report first quarter results on April 26, 2019.

The Federal Government had also shown itself to be supportive, at least in the initial phase: Federal Minister of Finance Olaf Scholz (SPD) had advocated "national champions" at the German financial centre. In a policy paper on industrial policy, Federal Economics Minister Peter Altmaier (CDU) declared Deutsche Bank to be relevant for the German economy.

But a possible merger was considered high-risk from the outset: on the one hand, because the reduction of tens of thousands of jobs would have been very expensive. On the other hand, because Deutsche Bank is in the midst of integrating Postbank and the merger of Deutsche Bank's traditionally weak IT and control systems was considered a major challenge.

Commerzbank wanted the merger, Deutsche Bank did not. However, Deutsche Bank had recently been urged by financial investor Cerberus to open up to this option.

The consolidation on the European banking market would have spoken in favour of the merger. However, the fact that a merger would have tied up all management staff for months and would therefore have weakened Deutsche Bank in global competition speaks against the merger.