Less than 24 Hours after Duetsche Bank announces the that they may need a "bad bank", essentially an off balance sheet place to put all their toxic assets, their merger talks with Commerzbank collapse.
https://www.cnbc.com/2019/04/25/deutsche-bank-and-commerzbank-merger-talks-collapse.html
Quote from the article:
"Both banks have struggled to return to profit since the global financial crisis of 2008, and the subsequent euro zone sovereign debt crisis of 2011. In the past few years, Deutsche Bank in particular has made headlines for all the wrong reasons — from settlements with the U.S. Department of Justice, to management reshuffles, weak earnings, constant restructuring and steep stock price falls.
More recently, there’s been reports of the Federal Reserve investigating its role in a money-laundering scandal at Danske Bank and an inquiry from two U.S. House of Representatives committees on the lender’s ties to President Donald Trump. Earlier this month, a report in U.K. newspaper The Guardian said the German bank could face legal action over a $20 billion Russian money-laundering scheme.
Deutsche Bank’s management said Thursday that it “will continue to review all alternatives to improve long-term profitability and shareholder returns.”
https://seekingalpha.com/news/3453407-deutsche-bank-mulls-forming-bad-bank-wsj
Quotes from the "bad bank" article:
Deutsche Bank (NYSE:DB) executives are considering putting the German lender's unwanted assets and businesses that could be marked for closure into a newly formed unit–creating a so-called "bad bank", the Wall Street Journal reports, citing people familiar with the matter.
Such contingency plans are becoming more important as merger talks with German rival Commerzbank (OTCPK:CRZBF) have proven more complicated than originally expected.
The bad bank, a unit for disposing assets and discontinued operations, could be used whether or not Deutsche Bank merges with Commerzbank. A merger would likely lead to significant cuts to part of Deutsche's investment bank to focus on its most-profitable areas.