Föhrenbergkreis Finanzwirtschaft

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Relegation: German banks

Posted by hkarner - 25. September 2018

Date: 24-09-2018

It’s as if Bayern Munich no longer qualified for the Champions League, or Borussia Dortmund dropped out of the Bundesliga. Today Deutsche Bank is due to be ejected from the Euro Stoxx 50, a blue-chip share index. Meanwhile Commerzbank, the second-biggest, faces relegation from the DAX 30, the domestic top flight.

Since mid-2007 Deutsche’s market value has fallen by two-thirds, to €22bn ($26bn); Germany’s top bank looks up at three each from France and Spain, two from Italy and the Netherlands, and one from Belgium.

Deutsche swaggered before the financial crisis, spent years in denial after it—and still looks lost. Now its newish boss, Christian Sewing, is slashing costs, focusing on serving European companies and consolidating the domestic retail business.

Commerzbank too has struggled for a decade: the government still owns 15%-plus and the bank’s return on tangible equity is a paltry 4.3%. Speculation swirls about a merger—but would either want the other?

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