German cooperative lenders DZ Bank and WGZ Bank have agreed to merge their businesses, creating the country’s third-largest financial institution.
The combined venture will begin operations on 1 August 2016 under the name DZ BANK, managing total assets of about EUR500bn.
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The joint institution is expected to achieve direct earnings and cost synergies of at least EUR100m per annum after the integration is completed, the lenders said in a statement.
The combined entity will serve as a central clearing bank for over 1,000 German cooperative banks.
The new entity will be led by DZ Bank chief executive Wolfgang Kirsch, while the supervisory board will be headed by DZ Bank supervisory board chairman Helmut Gottschalk.
The existing CEO and chairman of WGZ Bank, Hans-Bernd Wolberg, and Werner Böhnke, will assume the role of deputies for Kirsch and Gottschalk respectively.
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By GlobalDataCommenting on the merger, Kirsch said: "We share the view that now is the right time for this merger – in the interest of the entire organisation. This step will be taken in an equitable, balanced manner and on the basis of equal partnership. Both institutions offer their owners considerable strategic and commercial benefits.
"Furthermore, in an environment defined by regulations, low interest rates and digitisation, we are opening up new opportunities with respect to earnings and growth for the cooperative banks, the joint central institution and the cooperative sector’s specialised service providers."
Böhnke said: "The planned merger is based on the stable foundation, where both institutions focus consistently on the cooperative banking network, and on their successful cooperation that has been intensified in recent years. Furthermore, both banks have successfully passed the comprehensive assessment conducted by the European Central Bank in 2014. This increased level of trust will now allow us to take this major step forward with confidence and in the interest of our organisation."
The proposed merger is the largest deal in Germany’s banking industry since Deutsche’s takeover of Postbank in 2010.
