Germany’s Troubled Banking Giants Decide Against a Merger

Deutsche Bank and Commerzbank abruptly called off their merger talks Thursday, saying they concluded that the perils of trying to forge a megabank with international clout outweighed the potential benefits, the International New York Times reported. But while Germany’s two largest banks answered one question that had preoccupied the country in recent weeks, they raised another: What next? The status quo is not an option for either Frankfurt bank. Both suffer from urgent problems that include meager profitability, excessive labor costs and a shift to online banking that they have been slower to embrace than their competitors. Europe has too many banks for too few customers, and marginally profitable lenders are a source of economic weakness. For all its flaws, the failed quest to merge Deutsche Bank and Commerzbank was an attempt to attack that fundamental problem. Read more