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German watchdog says bank mergers no panacea

Published 01/09/2016, 11:18
Updated 01/09/2016, 11:20
© Reuters. Visitors arrive to Commerzbank's headquarters before the bank's annual news conference in Frankfurt

FRANKFURT (Reuters) - Banking mergers can help to lower banks' costs but are no panacea for the problems confronting the sector in an era of negative central bank interest rates, the head of Germany's financial watchdog said on Thursday.

"Consolidation cannot be a goal in itself," Felix Hufeld told a banking conference, a day after news emerged that Germany's two biggest lenders, Deutsche Bank (DE:DBKGn) and Commerzbank (DE:CBKG) had recently explored prospects for a merger.

It is tough work to extract synergies from mergers, and merging two weak banks does not usually create a strong one, Hufeld added.

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