China’s Predatory Lending
February 12, 2025
Sugary beverages manufactured by companies such as Coca-Cola and Pepsi are colloquially called “soda” in the United States. Americans consume soda in large quantities. This consumption can be attributed to the fact that soda is easily and cheaply available. The low cost and easy availability are considered to be one of the main reasons why […]
The money market is a full-fledged financial market. Hence, there are many investors who are keen to hedge the risks which emanate from the money market. The need to hedge these risks has led to the creation of several money market derivatives. There are certain exchange-traded derivatives that are a part of the money market […]
In the previous articles, we have discussed that the money market has various sub-sections. One of the most important sub-markets is the commercial paper market. The commercial paper market accounts for a sizeable amount of funds that flow through the money market. In this article, we will have a closer look at the details of […]
It is often said that profit is a reward for risk bearing. Nowhere is this truer than in the case of banking industry. Banks are literally exposed to many different types of risks. A successful banker is one that can mitigate these risks and create significant returns for the shareholders on a consistent basis. Mitigation […]
After a firm has filed for bankruptcy, the court provides relief against creditors and even further lawsuits. However, this is a temporary situation. According to the court, the next step for the business is to re-organize itself. Now, reorganization is a broad term that could mean different things to different people. There have been bankruptcy […]
Deutsche Bank which, which was once a dominant German financial institution has now become extremely fragile. This German bank managed to make it past the great recession of 2009. However, the bank has been facing one challenge after another ever since the recession got over. At the present moment, the bank is functional and solvent. However, the German government is afraid that if the economy faces any shock or even if Deutsche bank has to pay a big fine, it will simply collapse. The German government is not very comfortable with this situation. Deutsche Bank is one of their central financial institutions and financial troubles at Deutsche Bank could endanger the fledgling export-led German economy. This is the reason why the German government is eager to merge the Deutsche bank with Commerzbank.
However, the merger process hasn’t been a smooth ride either. The government is facing stiff resistance from employees at these institutions. In this article, we will have a closer look at this proposed merger as well as the possible after-effects.
The German government has made it very clear that it wants to keep the financing of German small and medium enterprises in German hands. This is the reason why it wants Deutsche Bank to merge with Commerzbank. Commerzbank, like Deutsche Bank, was under severe financial stress after the 2009 crisis. The bank would not have survived had it not been for the bailout by the German government. Also, Commerzbank itself has gone through several mergers. Hence, it has the required experience to manage a merger of this magnitude.
At the present moment, the German government has a 15% equity stake in Commerzbank. Also, it fears that Commerzbank is also volatile and hence is a likely target for a hostile takeover bid by a foreign bank. The German government, therefore, sees Deutsche Bank and Commerzbank as two entities which have complementary needs. If left alone, both the entities are likely to collapse. However, if merged together, the combined entities will have the financial wherewithal to survive grave financial distress.
The merger of Deutsche Bank and Commerzbank would result in many advantages. Some of them have been listed below.
There are many problems and issues which may arise once the Commerzbank, Deutsche Bank merger takes place. Some of these problems have been written below:
Your email address will not be published. Required fields are marked *