If the last decade has taught us anything, it is that the only way to handle a dying megabank is to take said bank and graft its critically ill body to a healthier large bank and hope that the resulting monstrosity is strong enough to survive. It's, like, science.
After spending the last few years watching the health of Deutsche Bank decline with the speed and subtlety of Amy Winehouse, German officials are finally stepping in to save the nation's largest lender, by going the Full Geithner:
The German government is intensifying efforts to help fix Deutsche Bank AG, with officials studying ways to make it easier to merge with Commerzbank AG, people familiar with the matter said.
We're hardly anyone to question German efficacy, but how is Germany's fourth-largest bank by assets going to take on the burden a bank almost four times its size? After all, Commerzbank's annual revenue is roughly equivalent to one Deutsche Bank regulatory fine...
The high-level discussions -- which have included Finance Minister Olaf Scholz and Deutsche Bank Chief Executive Officer Christian Sewing-- are looking at concrete ways the government can assist in a potential combination of the country’s two largest lenders, said the people, asking not to be identified discussing the private deliberations. The talks include potentially changing existing laws to make the steps necessary for a merger less costly, they said.
Well if you're going to change laws, Germany, why not just make money laundering legal and save everyone the trouble of a monster bank merger? Or just erase like a quarter of basic financial regulations and watch Deutsche soar!
But seriously, we thought the Germans were going to give newly-installed Deutsche CEO Christian Sewing a chance to make a miracle happen. Isn't it a little brusque to just make him marry a smaller, better bank? How does he feel about this?
Sewing has publicly argued that a merger or any other potentially big strategic move doesn’t make sense for the time being as he focuses on reaching his targets for this year and next. However, he’s also said privately that he will reconsider his planned time line if it becomes clear that he will fail to achieve his goals, a person familiar with his thinking has said.
Oh, wow, so this whole thing is happening pretty soon.