Deutsche Bank share price edges lower amid Commerzbank merger talks

Deutsche Bank saw its share price edged lower on Friday morning after unveiling its full-year results, despite the German lender forecasting stronger revenues in 2019 and its CEO Christian Sewing warming to the idea of a merger with rival Commerzbank.

The bank’s management board opted to pay itself around €55.7 million in bonuses at the end of the 2018 fiscal year – their first in four years – with Sewing getting a pay-out of €7 billion, making him one of the best paid CEOs in European banking.

‘It adds to the negative overall picture of the bank, which is reeling from scandals and now apparently wants to plunge into a bad merger,’ Gerhard Schick, finance activist at Finanzwende and ex-member of the German parliament said, commenting on the bank’s bonuses.

‘We can look back on 2018 as a year that was anything but easy for Deutsche Bank,’ Deutsche Bank Chairman Paul Achleitner said. ‘Despite many challenges, we accomplished a great deal, made excellent progress in many areas and achieved our stated objectives.’

Deutsche Bank results: key figures

The German lender saw total net revenues fall to €25.3 billion in 2018, down from €26.4 billion in the previous year, while total noninterest expenses fell €24.7 billion in 2017 to €23.4 billion.

Meanwhile, basic earnings per share hit 0.01 cents a share in 2018, down from 0.53 cents in the previous year, with banks share price falling from €15.88 at the end of 2017 to €6.97 at the time of reporting its full-year results.

‘Deutsche Bank has built very solid foundations – this is the basis for controlled growth,’ Achleitner said. ‘The clearest sign of the turnaround is that for the first time since 2014 we reported a net profit, of 341 million euros. Year-on-year this is an improvement of more than 1 billion euros.’

‘We also managed to increase our pre-tax profit to 1.3 billion euros. Returning to profitability was a vital milestone for us,’ he added.

Merger with Commerzbank

Deutsche Bank’s lacklustre results and its controversial bonus pay-outs come as the lender starts to seriously contemplate a merger with rival Commerzbank, which if completed could see more than 30,000 slashed.

The merger is far from a done deal, however; asboth bank’s performance has been poor, with Deutsche Bank only managing 0.4% return on equity last year, while its rival managed just 3%.

The merger has also come under heavy criticism, despite a deal between the two lenders capable of creating Europe’s third-largest bank in terms of assets, with many commentators noting that combining two bad banks doesn’t create a better one.