48 days later: let’s call the whole thing off…
A few weeks after the much touted – and long anticipated – merger talks between Deutsche Bank and Commerzbank started, they have come to a sudden grinding halt.
Why? “[The merger] would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration”, according to a DB press flack.
At the risk of sounding wise after the fact: wow, really Sherlock?
Actually, forget ‘after the fact’ – I, and many, many others, pointed out these very problems right from the get go.
In truth, we all pointed them out with much less brevity and force than a former colleague and friend of mine did at the time: “What do you get when you smash two piles of horseshit together?” he asked me. The answer? “A bigger pile of horseshit and smelly fingers”. Boom boom.
Now DB will have to try to grind its way to recovery via the slow, tedious process of growing the well-run, strategically viable, healthy parts of its business while cutting costs and disinvesting in the bad bits.
To this end, there is a proposal for a ‘bad bank’ (or, to be more accurate, ‘Bad Bank II: This time we’re serious’) in line with the time-honoured horror film theory that it’s best to chain the zombies up somewhere safe. Guys! A spoiler: it never works in the movies.
Also – wasn’t this ‘grinding’ strategy exactly what the late, and seemingly unlamented Mr Cryan was implementing? Just asking.
What is curious in all this merger stuff is that the response of the stock market when the merger was first mooted was to push DB’s shares higher. Now the merger is cancelled the initial response of the stock market is to push DB’s shares higher.
It’s almost as if the market – awakening to all the complexities and difficulties – sobered up after the early euphoria and realised what a terrible idea a merger was in the weeks between the two moves.
And on a totally unrelated note…
For those of you coming afresh to the latest series of the unpredictable bitcoin saga – here is a recap.
First, a coin was worth next to nothing; then it went mental and was briefly worth almost $20,000 around Christmas 2017. That was the point everyone got frantically excited.
But then bitcoin deflated until, last summer, it was mysteriously pegged for months on end at $6,000 by the central bank of bitcoin. Subsequently it suddenly crapped out to near $3,000. Lately, though, it has recovered to almost double that.
Why? I haven’t a damn clue and nor, it appears, has anyone else.
That said, one pointer that made the press today is that the rapper Lil Pump is getting into bitcoin. I am not familiar with Mr. Pump’s oeuvre (I am 57 and it would be unseemly) but this news gives me great confidence in the future health of the Cryptocurrency. So all I can say right now is: Buy, Mortimer! Buy!
Or, rather, buy until Mr. Pump’s rival rapper Lil Dump comes on the scene.
Then, all bets are off.
April 26, 2019 at 12:34 am
Great article – and funny to boot. Nice one Kevin. Don’t think DB was innately ever keen on this – “kicking and screaming” is apt … They needed to play the discussions game and save appearances.