Deutsche Bank (DB) shares were marked modestly higher Monday, even as stocks around the region drifted lower, following a German media report that suggested the troubled lender could be merged with domestic rival Commerzbank AG (CRZBY) .
A German Finance Ministry spokesperson declined to comment on the Focus Magazine report, published Saturday, that the government could orchestrate the tie-up in order to ensure that it has a lender commensurate with its status as Europe's biggest economy.
Deutsche Bank shares were marked 0.6% higher on the session, against a 0.51% decline for the broader DAX performance index benchmark, to change hands at €7.72 each but have still lost more than half of their value so far this year and have a market cap of just €16 billion ($18.24 billion) against a balance sheet of €1.4 trilllion.
Commerzbank bank shares were also outperforming the broader market, rising 0.86% on the session to €6.89 each, taking their market value to just over €9 billion.
France's biggest lender, BNP Paribas SA (BNPQY) , has a market value of just over $60 billion, while HSBC plc (HSBC) , the London-based bank with a larger focus on markets in Asia, has a market value of $163 billion.
Germany's biggest lender has been the subject of persistent takeover speculation following a series of disappointing quarterly earnings and news that activist investor Hudson Executive Capital LP, led by former JPMorgan CFO Douglas Braunstein, had built a 3.1% stake.
Deutsche Bank CEO Christian Sewing told Germany's Bild am Sonntag earlier this month that he had "no indication" of a potential takeover despite the bank's shares hitting a then-record low of €8.032 following raids by Frankfurt prosecutors investigating money launder allegations linked to the Panama Papers.
"We are on track to make our first profit for three years," he told the paper, "It is only a matter of time before this progress is reflected in the share price."
Citigroup CEO Michael Corbat dismissed the prospects of a tie-up with the troubled European lender last month, telling Manager Magazin there was "too much overlap" between Citigroup's and Deutsche Bank's businesses and that a takeover based purely on cost savings wasn't a good idea.
The Frankfurt raid was is the latest turmoil to sweep across Germany's largest lender, which has lost more than half its market value since asking investors for an $8.5 billion capital increase in March 2017 following a multi-billion settlement with U.S. legal authorities linked to the mis-selling of mortgage bonds in the run-up to the global financial crisis.
Deutsche Bank has targeted significant costs cuts across its global operations, including a pullback in its investment banking division in the United States, as part of a larger effort to re-align its focus to domestic and European markets amid years of losses and the failure of the second phase of the Federal Reserve's stress tests this summer.
The Fed expressed concerns over the way Deutsche Bank's U.S. division forecast future revenues in the face of a theoretical global recession, and a spike in domestic unemployment, and "material weaknesses" its data capabilities and capital planning processes.
Deutsche's third quarter earnings also suggested the bank was struggling to overcome its eroding reputation, with Deutsche Bank's trading division, a critical revenue driver, seeing 15% declines in both fixed income and equity turnover.
Sewing said in July that he had "accelerated the reshaping of our bank significantly and proved the resilience of our global business," over the second quarter, and made "important changes to our core businesses".