The possibility of Germany’s two largest banks merging, dubbed a historic moment for the country’s economy, is still all up in the air. While the government has long pushed for creating a viable player against US and Asian financial behemoths, critics have pointed out at layoffs as well as cementing multibillion-euro-debts.

Deutsche Bank and Commerzbank have confirmed their merger talks with statements after it was reported their management boards had met separately, according to Reuters.

“In light of arising opportunities, the management board of Deutsche Bank has decided to review strategic options”, Deutsche Bank said although its chief executive Christian Sewing also warned that many factors could stop the deal.

At the same time, Commerzbank pointed out that the outcome of the talks had not been decided as both parties are yet to study the possibility of such a move. Reuters reported that the supervisory boards of Deutsche Bank and Commerzbank are to meet on Thursday to discuss the status of the talks.

The official confirmation by the two banks, acknowledged by the German Finance Ministry, was preceded by statements from its head Olaf Scholz. He confirmed reports by Die Welt Am Sonntag about the merger negotiations a week ago before both parties preferred to go public.

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The merger, which the German newspaper Die Welt refers to as a historic moment for the German economy, was first floated in 2016 before Germany’s two largest banks focused on restructuring. This prompted Reuters to conclude that the official disclosure of talks boosts the chances that both banks conclude the agreement.

However, if they agree that merging makes no financial sense and give up on the idea this could mean that Germany should probably abandon the idea of playing more than a minor role in the world of international finance, as Die Welt put it.

The “marriage” between the two entities would lead to creating a mega-institution, owning one-fifth of the country’s banking sphere, which would also become the third largest bank with $2.04 trillion in assets and a $28-billion market value.

The merger has long been pushed by the country’s government. It publicly endorsed bank consolidation, as German Finance Minister Olaf Scholz stated last autumn that it would be a problem if, in an economy like the Germany’s, banks do not have the size and the global impact to support it.

This was echoed by his fellow cabinet member, Economy Minister Peter Altmaier, who wrote in his paper "National Industrial Strategy 2030" that the international banking system demands "large and strong players who are at the same level with competitors from the US and China". He emphasised that the long-term success and survival of such companies as Deutsche Bank is part of the nation’s political and economic interest.

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However, there has been no shortage of criticism about the possible deal. Some, like lawmaker from the Christian Social Union, Hans Michelbach, warn against raising the government’s share in such big banks. One of Germany’s biggest labour unions, Verdi, also voiced concerns saying the merger puts tens of thousands of jobs at risk without adding any value.

Reuters also cites one German official as saying that the union carries one particular risk of creating “a multi-billion-euro financial hole” as a result of its assets, including Italian bonds being evaluated.