Deutsche Bank CEO says 'wave' of European bank mergers is coming

Deutsche Bank's chief executive, Christian Sewing, has forecasted a "wave" of European bank mergers while dismissing rumours that he could bid for domestic competitor Commerzbank.

Speaking at the Financial Times’ Global Banking Summit on Wednesday, Sewing stated that consolidation in the sector will speed up and could be further supported by regulatory changes, as reported by City AM.

"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," said Germany’s largest bank's head.

However, he noted that fragmented regulatory regimes across Europe were "a hindering item for further trans-European consolidation".

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

UniCredit, under the leadership of seasoned investment banker Andrea Orcel, has encountered resistance from German politicians over its assertive strategies to surpass the government as Commerzbank’s principal shareholder. Deutsche Bank, with Christian Sewing at the helm, is often mooted as a likely contender for Commerzbank due to its comparable scale in German operations.

Despite advocating for more consolidation in European banking, Sewing has dismissed speculation about preparing a bid. "Obviously on purpose, because I’m not part of this deal, I’m staying out of this," he commented.

He emphasised Deutsche Bank's current priorities: "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."

In February, Deutsche Bank announced plans to eliminate approximately 3,500 jobs within the next couple of years, following in the footsteps of peers like Citi and Barclays who are also aiming to streamline their businesses and cut costs. On Wednesday, Sewing reiterated his commitment to cost management, saying, "keeping costs under control or even reducing it" was a focus.