The US investment group has taken a 3 percent stake in Germany's biggest lender, making Cerberus the fourth largest shareholder and fueling speculation about a merger between Germany's biggest private banks.
Deutsche Bank shares reversed steep early loses in Frankfurt trading Wednesday, rising to a three-and-a-half month high after it had said that Cerberus Capital Management had taken a 3 percent stake in Germany's biggest lender.
Cerberus specializes in distressed investing which, obviously, is a perfect description of Deutsche Bank's current circumstances The bank's third-quarter results showed that revenue growth was not only elusive, but the situation was getting worse.
With the acquisition, Cerberus is adding to its financial sector exposure in Europe's largest economy where it already owns a 5 percent stake in Germany's second largest private lender, Commerzbank.
"We have a constructive view of European fundamentals and believe Germany is a highly attractive place to invest, in particular,” a Cerberus spokesman said, adding it saw long-term opportunities in retail and corporate banking due to Germany's robust economy and high savings rate.
Speculation that a new shareholder would emerge heightened after Deutsche Bank disclosed on Tuesday that US investment bank Morgan Stanley had acquired a significant holding in voting rights.
Morgan Stanley previously held 0.47 percent of voting rights in shares, but has boosted its rights in the German lender to 6.86 percent, with the vast majority of those rights through instruments such as call options, rights of recall over securities lending agreements, equity swaps and put options.
It remains unclear whether the Cerberus and Morgan Stanley disclosures are linked. But a stock market trader told the news agency Reuters that recent developments were fueling the fantasy of a merger between Deutsche Bank and Commerzbank. "I can understand this speculation because Cerberus wouldn't buy into German banks without reason," the trader said.
In 2016, top executives of Deutsche Bank and Commerzbank held talks on a potential combination, but shelved the project to complete their restructurings before taking steps towards any merger.
German law requires disclosure when stakes exceed the 3 percent and 5 percent level. The Morgan Stanley threshold was crossed on Nov. 6, while the Cerberus threshold was reached on Nov. 14.
uhe/mds (Reuters, dpa)