Bigness in banking isn’t a virtue, so beware of defensive mergers

It never works to take two unhappy companies and blend them into a bigger pile of misery. That’s the way it looks at the investment giant Standard Life Aberdeen, known to some as ‘Staberdeen’, where Aberdeen Asset Management founder Martin Gilbert seems to have just lost a power struggle with his former co-chief executive Keith Skeoch from the Standard Life side. And that’s certainly the way in Frankfurt, where Deutsche Bank and Commerzbank are being shoved together by pressure to create what German finance minister Olaf Scholz foresees as a national champion that would be the second largest lender in the eurozone (after BNP Paribas of France) and impregnable to foreign takeover.

This monster marriage was first mentioned here as a possibility in late 2016, when Deutsche was in legal trouble in the US over dealings in mortgage-backed securities that eventually led to a $7 billion settlement and Commerzbank, having been bailed out after its own rescue of Dresdner Bank, was also going through a painful restructuring.