Germany: Banks in €260B merger talks

Germany’s fragmented savings banks took a fresh step toward consolidation as two large regional lenders were set to open talks about a tie-up, reported The Financial Times. 

The decision to start formal discussions between Frankfurt-based lender Helaba and asset manager Deka was taken on Tuesday, October 8, by the regional banking executives that control them. 

Landesbanken are regional, wholesale-focused institutions that serve the local savings banks, or Sparkassen, and are co-owned by the Sparkassen and regional government. 

The enlarged lender could become a driving force in future consolidation within Germany’s fragmented public banking sector, which is reeling from low interest rates, high costs, and expensive bailouts for state-owned regional lenders.  

“In the long run, local Sparkassen want to have one efficient wholesale institution that can support local savings banks in a more powerful way,” one person briefed on the plans told the Financial Times.

People briefed on the renewed push for consolidation warned that a successful deal was anything but certain. “It will be a drawn out and complex series of negotiations,” warned a senior Sparkassen employee. A second person briefed on the plans warned that “the past has shown that anything can happen [in the Sparkassen sector].” 

The diverse ownership structure of Deka and Helaba is one of the key obstacles. While the asset manager is entirely controlled by Germany’s 385 local savings banks, the regional governments of Hesse and Thuringia hold a 12% stake in Helaba.

Full Content: Financial Times

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.