Embattled German lender Deutsche Bank AG was considering raising as much as €10 billion ($11.2 billion) to help finance a potential merger with Commerzbank AG, according to a report from the Financial Times on Thursday (paywall). Citing unnamed sources, the FT said executives at Deutsche Bank have been weighing between €3 billion and €10 billion stock sale to fund a tie-up with its rival, with the German government encouraging the largest possible raise so that that the combined entity doesn’t have to return to the markets soon if and when a merger is consummated. The Wall Street Journal two weeks ago reported that Deutsche Bank and Commerzbank AG entered formal merger negotiations. The potential deal comes as the performance of Deutsche Bank in particular has lagged behind rivals domestically and outside of Germany in recent years. Combining the banks would produce a German lending giant with a roughly $2 trillion balance sheet and could help address government skepticism about the health of both. Shares of Deutsche Bank listed in Germany were off 3% after the FT report, while those for Commerzbank were down 1.9%. For the year, however, Deutsche Bank’s shares are up 4.5%, while those for Commerzbank are on pace for a year-to-date gain of about 21%, according to FactSet data.
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