Could generate cost savings.
Bloomberg News reports that Deutsche Bank may revisit aborted merger talks with local rival Commerzbank, yet such a deal could take years, require a massive capital increase and see the wipeout of investment banking that doesn’t service German clients, according to Barclays.
Under a scenario outlined by analyst Amit Goel, a combination between the two German firms, which they discussed two years ago, could generate cost savings and produce a lender that poses less systemic risk to the financial system. The new company’s return on tangible equity, a measure of profit, could reach almost 9 percent by 2020, near Deutsche Bank’s stated 10% goal; solo, Deutsche Bank’s ROTE will reach 2 percent at best, Goel wrote.
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