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German lawmakers ready to block public cash for Deutsche-Commerzbank

German lawmakers ready to block public cash for Deutsche-Commerzbank

BERLIN: Lawmakers are warning Germany’s finance minister that they will block any attempt to invest public money into a merged Deutsche Bank and Commerzbank, a deal which could require up to 10 billion euros ($11.2 billion) of fresh capital.

They intend to deliver this message at a closed-door meeting next week with Olaf Scholz, although it is unclear whether the Social Democrat finance minister still plans to attend.

“The merged bank will probably need fresh capital. One thing that we will not stand for is that the state gives more money,” said Bettina Stark-Watzinger, who chairs the Bundestag’s finance committee, emphasizing a hurdle to any deal.

Deutsche Bank’s exploratory merger talks with state-backed Commerzbank come after prodding by Germany’s finance ministry, which is worried about the future of the country’s biggest bank.

A deal would see Berlin become a shareholder in the combined group, which one German official said will need up to 10 billion euros of fresh capital because of restructuring costs and the fact that losses on investments could be triggered by a tie-up.

While German parliamentarians cannot stop the merger itself, they are warning that the Bundestag can block any fresh money to fill a capital shortfall, a crucial pillar to any deal.

“This goes contrary to one of the lessons of the financial crisis – that the taxpayer should not foot the bill for troubled banks,” Stark-Watzinger said.

A spokesman for Scholz, who was the first to publicly reveal the merger talks but has since sought to distance himself from the process, insisting it is up to the banks to decide on their future, declined to comment, as did Deutsche Bank.