Deutsche Bank looked at merger scenario with UBS: Handelsblatt

FRANKFURT (Reuters) - Deutsche Bank has considered a theoretical merger with UBS to study the effects of any tie-up, the German business daily Handelsblatt reported on Wednesday, citing people familiar with the matter.

The scenario, along with a potential merger with Commerzbank, was discussed at the bank's strategy meeting with the supervisory board earlier this month, Handelsblatt said.

Deutsche Bank, UBS and Commerzbank declined to comment on the report on Wednesday.

Speculation of a possible merger has increased as Germany's largest lender battles to recover from three consecutive years of losses. Deutsche Bank has made management changes and announced a strategic overhaul that includes thousands of job cuts and scaling back its global investment bank.

On paper, a potential merger with UBS fares better than a deal with Commerzbank as Deutsche Bank and the Swiss lender would complement each other well in the areas of investment banking and wealth management, the report said.

A merger with Commerzbank, in contrast, might lead to high restructuring costs due to a large overlap, the paper said.

Deutsche Bank Chief Executive Christian Sewing on Monday dampened speculation of a possible merger in the near term, saying the bank must focus on its homework for the next 18 months.

Executives of Deutsche Bank and Commerzbank are increasingly open to the idea of a merger, German news magazine Der Spiegel reported earlier this month.

The German government, which owns more than 15 percent of Commerzbank, has stoked merger speculation.

Olaf Scholz, Germany's finance minister, has said that the country needs strong banks to foster exports. Some bankers privately regard that as a shift in sentiment and hints at a willingness to back the financial industry through policies such as engineering a merger.

Under the merger scenario with UBS, Deutsche would be the junior partner, and the German government would have to accept that, the paper said.

UBS has in the past looked askance at big takeovers. Switzerland has also debated about banks being too big to fail.

Handelsblatt quoted an unnamed source as saying that managers at the strategy meeting stressed that any immediate merger was "completely unrealistic."

(Reporting by Christoph Steitz and Tom Sims; Additional reporting by Michael Shields in Zurich; Editing by Louise Heavens)