Why Commerzbank and Deutsche Bank Are Limping to the Altar

Deutsche Bank AG and Commerzbank AG have independently worked at turning around their fortunes -- without much success. Now Germany’s two biggest publicly traded lenders are figuring out if a merger makes sense, but the idea faces strong opposition. While a tie-up might help them withstand the next economic slump, critics doubt it can produce a single strong lender. As bankers have been saying: "two turkeys do not an eagle make."

It’s getting closer. The banks confirmed on March 17 that they had agreed to begin formal merger talks, a move that came after the government signaled it wouldn’t stand in the way of necessary job cuts and cost reductions. Deutsche Bank Chief Executive Officer Christian Sewing had previously ruled out any deal before the end of the year, with people familiar saying he hoped that by then a merger with a big bank outside Germany might become feasible. A formal decision on whether to proceed with talks is due before the end of April, but opposition is mounting.