April 4, 2018 / 5:04 PM / in 6 months

Watchdog says big German banks should not merge: Handelsblatt

FRANKFURT (Reuters) - Germany’s big banks should not merge, the country’s top banking supervisor said in an interview with newspaper Handelsblatt.

Such a step would not fix the banks’ weak earnings and would risk creating an institution that is too big to fail, Raimund Roeseler, executive director at financial regulator Bafin, said.

“If I take two big problems and turn them into one really big problem, then I’m not making the situation any better,” Roeseler said in excerpts of an interview released ahead of publication on Thursday.

Roeseler’s comments came as mounting losses at Deutsche Bank (DBKGn.DE), Germany’s biggest bank, have led to questions over the leadership of CEO John Cryan and the viability of its investment bank.

Germany’s second biggest bank Commerzbank (CBKG.DE) remains partly state-owned after receiving a bailout following the global financial crisis a decade ago. There has been some speculation that the two should merge.

“After the financial crisis there was an intense debate about the issue of ‘too big to fail’, and whether banks should be allowed to grow so big that they can’t be allowed to go bust,” Roeseler told Handelsblatt, adding that if two big banks were to merge now, the same problem would be created again.

Reporting by Douglas Busvine. Editing by Jane Merriman

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