Shares in Deutsche Bank and Commerzbank surged after it emerged that private-equity firm Cerberus is a top shareholder at Germany’s two biggest banks, Steven Arons, Sarah Syed and Aaron Kirchfeld report.
Cerberus, controlled by US billionaire Stephen Feinberg, declined to comment on why the New York-based private equity firm acquired about 3% of Deutsche Bank, after disclosing a 5% in Commerzbank in July.
Commerzbank has been in discussions with potential buyers, prompting some analysts and investors to speculate that Cerberus could push for a combination of the two banks.
Cerberus is best known here for the controversy that erupted after it bought the Project Eagle loans in an auction from Nama, in 2014.
“It’s unlikely that Cerberus’s rationale for its investments in Deutsche Bank and Commerzbank is purely based on the expectation that two banks can be turned around,” said Michael Huenseler at asset manager Assenagon, which owns Deutsche Bank stock. “This is likely to fuel speculation around a merger between the two banks,” he said.
Deutsche Bank, in a statement, said it welcomed “every investor who believes in the value potential of the Deutsche Bank share”.
Both lenders held talks about a potential merger last year but decided against pursuing a transaction as they focused on restructuring their own businesses first, a source said at the time. Both are now reemphasising their core German operations and trying to improve their domestic retail businesses, though they’ve struggled to translate that into higher revenue.
“This is revolutionary for Deutsche Bank,” said Ingo Speich, a fund manager at Union Investment, an asset manager. It’s “a clear change in Deutsche Bank’s shareholder structure because it adds a private equity firm,” he said.
Private equity firms typically invest in companies with a view to gaining influence over its operations, often to take them private.
Deutsche Bank chief executive John Cryan has settled billion-dollar legacy misconduct cases and raised €8bn from shareholders this year.
“We have a constructive view of European fundamentals and believe Germany is a highly attractive place to invest, in particular,” said a spokesman for Cerberus.
“There are attractive long-term opportunities in retail and corporate banking due to Germany’s robust economy, high savings rate, and a number of other factors.”