Deutsche Bank boss: A ‘wave’ of European bank mergers is coming

The chief executive of Deutsche Bank has predicted a “wave” of European bank mergers while playing down speculation he could make a bid for domestic rival Commerzbank.

Speaking at the Financial Times’ Global Banking Summit on Wednesday, Christian Sewing said consolidation in the sector will accelerate and could be supported further by changes to regulation.

“Scale is an issue which is important in many sub-businesses we have, and therefore the general trend that consolidation is happening is, in my view, a logical trend which we will see even more in future,” the head of Germany’s biggest bank said.

However, he added that fragmented regulatory regimes across the continent were “a hindering item for further trans-European consolidation”.

Sewing called for “more harmonised regulation” and “having actually one regulation for all European countries”.

“A full banking union would make it easier actually to have pan-European consolidation, and therefore I do believe before the real wave starts, I do believe we need further foundations met,” he added.

“It is very hard for us at this point in time, even being active in 14 or 15 European countries, to shift liquidity from one country to another.”

Sewing’s comments come amid speculation that Italy’s biggest bank UniCredit will launch a takeover bid for Germany’s second-largest lender Commerzbank, after taking a nine per cent stake in September, which it it later raised to 21 per cent through derivatives instruments.

UniCredit, led by veteran investment banker Andrea Orcel, has faced pushback from German politicians for using aggressive tactics to put itself ahead of the government as Commerzbank’s largest shareholder.

Deutsche has long been considered a potential suitor for Commerzbank and is seen as a realistic counter-bidder as the only bank with German operations of a similar scale to UniCredit. But while backing more European banking M&A, Sewing denied that he was readying a bid.

“Obviously on purpose, because I’m not part of this deal, I’m staying out of this,” he said.

“I’ve made it very clear what Deutsche Bank’s mission is, in particular over the next two to three years. We’re fully focused on ourselves. I think we have only actually seen 60 to 65 per cent of our potential.”

Deutsche announced in February that it was planning to cut around 3,500 jobs over the next two years, following rivals like Citi and Barclays that are looking to streamline their operations and reduce costs.

Sewing said on Wednesday that he was focused on “keeping costs under control or even reducing it”.

“Of course, you need to also allow for growth, but it means that you always need to also look what further can I automate, where can I actually invest into the efficiency of processes,” he added.