DG Bank, GZ Bank Announce Merger
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FRANKFURT, Germany (AP) _ Two German cooperative banks have agreed to merge in a deal that creates the country’s sixth largest bank.
DG Bank and its smaller regional rival GZ Bank, both based in Frankfurt, announced the merger Sunday, saying the new bank will be called DZ Bank with assets of 700 billion marks ($315 billion).
DG Bank issue its stock to shareholders of GZ Bank. GZ spokesman Mathias Beers said GZ shareholders would receive half the combined company’s shares, or stock worth more than 12 billion marks ($5.4 billion).
The supervisory boards of the two banks as well as shareholders still have to approve the deal.
The takeover is the biggest in Germany’s banking sector since Bayerische Hypobank merged with Vereinsbank in 1997 to form HypoVereinsbank AG.
At the time, that merger created a bank with assets worth 53.1 billion euros ($45.6 billion). HypoVerinsbank is now Germany’s second largest bank, with assets worth 650 billion euros ($559 billion), including its recent takeover of Bank Austria.
The deal follows several failed mergers over the last year-and-a-half _ notably Deutsche Bank’s failed merger with Dresdner Bank and Dresdner’s botched attempt to buy Commerzbank.
Talks between DG Bank and GZ Bank began in February, and the two sides have said they can cut costs by roughly 220 million marks ($99 million) by combining operations.
The merger was nearly derailed earlier this month when DG Bank admitted it had a larger load of debt risk than previously acknowledged.
GZ Bank, which is much smaller than DG Bank, had pushed for at least an equal stake in the new bank because of the additional credit risk DG Bank was bringing to the deal.