Merkel’s party snubs government stake in Deutsche Bank

Bloomberg

German Chancellor Angela Merkel’s ruling party wouldn’t back the government taking a stake in Deutsche Bank AG to strengthen the nation’s financial industry, senior members said.
“The argument for a ‘big bank’ can be discussed as a matter of economic policy, but it doesn’t justify the use of taxpayers’ money,” Michael Meister, a member of the Christian Democratic Union’s national leadership, said in an interview.
He was responding to renewed speculation that the government is prodding Deutsche Bank and Commerzbank AG towards merging. Scenarios that have been discussed in the Finance Ministry include one in which the German state would become Deutsche Bank’s biggest shareholder for about five years before merging the two banks, Focus magazine reported, without saying how it got the information.
While a merger to build a strong bank for Germany’s export-oriented economy is said to have won the government’s support, how and when to reach that goal remains elusive. Germany’s government owns about 15 percent of Commerzbank, making it the bank’s largest shareholder.

POLITICAL CONSTRAINTS
Three other senior CDU officials who asked not to be identified all said a government stake in Deutsche Bank would be a non-starter. While Germany’s finance ministry is controlled by the Social Democrats, Merkel’s coalition partner, the sentiment within the CDU signals substantial political resistance to deploying public funds.
The comments by Meister, a former deputy finance minister, make it clear that Merkel’s party views the Commerzbank stake as an emergency measure owed to the financial crisis a decade ago that can’t easily be replicated and would be hard to explain to voters. Representatives for the ministry, Deutsche Bank and Commerzbank declined to comment.
As an alternative scenario, Deutsche Bank could raise money from German industrial companies to buy Commerzbank, Focus said. Another option discussed in the finance ministry has been creating a holding company that would own stakes in both banks,
according to the report.