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Macaskill on markets: Germany’s strange banking experiment

Germany may conduct a strange experiment in state-sponsored investment banking if a merger between Deutsche Bank and Commerzbank proceeds.


There are many unanswered questions about the potential deal to combine two ailing German banks to create one ailing German national banking champion.

Will Deutsche Bank be allowed to book an accounting gain for ‘ill will’ if it buys Commerzbank at the current huge discount to the theoretical book value of the smaller firm?

If Citigroup and Goldman Sachs split the bulk of the advisory fees on a deal, will Deutsche’s managers acknowledge the irony of a public confirmation of the corporate finance dominance of US banks in Europe?

Should Deutsche’s investment bank head Garth Ritchie get a special bonus for chairing a committee to come up with a name for the merged entity? Ritchie saw his fixed pay double to €6 million for 2018 because of supposed additional responsibility “in connection with the implications of Brexit,” so he will surely expect a reward for tackling the equally vexed question of how to structure a Commerzbank takeover that makes any commercial sense.

The disclosure in Deutsche’s annual report for 2018 that Ritchie has been awarded an extra €250,000 a month in a functional allowance for putting his Brexit thinking cap on has caused predictable outrage in Germany. 

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