Cerberus Emerges as Deutsche Bank’s New Shareholder

Two of Germany’s biggest banks, Deutsche Bank AG and Commerzbank AG swelled after private equity firm Cerberus Capital Management appeared to be the top shareholder of both banks.

U.S. billionaire Stephen A. Feinberg, co-founder and chief executive officer of Cerberus, refused to give any comment regarding possible plans for its 3 percent in Deutsche Bank and the 5 percent Commerzbank stake it announced back in July.

Some analysts and investors speculate that Cerberus might push for the merger of the two banks after it was known that Commerzbank has been in discussion with potential buyers.

An analyst stated that Cerberus reason for investing in both Deutsche Bank and Commerzbank is out of a mere expectation that the “two banks can be turned around.”

“This is likely to fuel speculation around a merger between the two banks,” he added.

A merger between the Germany’s biggest listed banks will result to a national champion which has a joint market share of 10 percent in German retail banking. The regional overlap also has the possibility of turning into something that will enable branches to close while also cutting costs.

Germany’s flagship bank is in the middle of deep restructuring after it went through billions of euros of losses back in 2015 and 2016. Deutsche agreed to pay $7.2 billion to U.S. law enforcement authorities in December last year. This was due to the latter’s accusation of the lender that they are misleading investors over the sale of toxic mortgage securities.

Analysts pointed out that a merger between the two banks will only make sense after Deutsche Bank resolves its restructuring, which one estimated will be in 2021. “At the moment, a merger [between Deutsche and Commerzbank] it is completely out of the question,” said a senior manager from one of the two lenders.

A Cerberus spokesperson said that they were able to see long-term opportunities in retail and corporate banking as they looked at Germany’s robust economy and high savings rate. “We have a constructive view of European fundamentals and believe Germany is a highly attractive place to invest, in particular,” he stated.

Cerberus now holds the fourth place in Deutsche Bank’s largest shareholders, following China’s HNA group, Qatar, and money manager Blackrock. It is the second-largest investor in Commerzbank after the German government.

The private equity firm has combined purchases in Germany’s top two lenders which is valued at 1.7 billion euros ($2.0 billion).

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