There have been weeks of speculation of whether the two largest German banks will come together.

The German state has officially given its blessing to a banking marriage between Deutsche Bank and rival Frankfurt-listed lender Commerzbank. Now comes the hard part - whether such a deal will work and will benefit the end client.

As widely reported this week, finance minister Olaf Scholz has agreed not to block the likelihood of heavy job cuts – tens of thousands according to Bloomberg this week – that such a corporate hook-up will cause.

A few weeks ago, Deutsche reported that it had swung back into profit in 2018, although it declined to comment to WealthBriefing about the matter. Commerzbank reported an operating profit of €1.245 billion ($1.412 billion) in 2018, up slightly from a year earlier.

Bloomberg, citing unnamed sources, said that a merger risks removing up to 30,000 jobs, which equates to more than 20 per cent of the combined workforce. Such a move will be politically controversial.

Deutsche Bank declined to comment when contacted by this publication.

Heavy job cuts could come, ironically, at precisely the point at which Frankfurt is deemed to be winning some banking business from London as a result of the need for UK-based banks to build subsidiaries in the EU due to Brexit.

It is unclear how its wealth management business will be affected by a merger. There is not much overlap internationally for this segment with Commerzbank, which is a domestically-focused organisation.

Reports say that a number of details remain to be thrashed out, such as how much capital a merger will require, and where from. A stumbling block could be European regulators, who may think that Germany’s banking industry is too concentrated on the upper echelons, although there are a mass of small- and medium-scale banks in what, in some ways, is a highly fragmented market. (See an overview of the market landscape here.)

(Editor’s comment: Corporate mergers that take place when banks have been through tough times and when clients are already nervous often prove unhappy marriages. Commerzbank bought Dresdner Bank in 2008 but Commerzbank had to be bailed out by the German government in the financial crisis. It is sometimes said that US financial titans such as JP Morgan, Citigroup, Bank of America and Wells Fargo have the benefits of an integrated single US market and a less fragmented sector, although the US market has some problems of its own. But for wealth management clients, while it might be more comforting if Deutsche/Commerzbank’s balance sheet were stronger, will they be keen to be managed by an even bigger entity, or will some clients prefer to be served by a nimbler, smaller organisation?)