Commerzbank rumors swirl as Deutsche Bank CEO states acquisitions are not a priority.

• In recent weeks, whispers about a possible tie-up between two German lenders have resurfaced due to concerns about bank profitability and reports that the German government may sell some of its company stakes.
• Given the rise in interest rates, it is important to consider fair value gaps in banks' mortgage books, but Sewing believes it is not a top priority for this year.

Christian Sewing, CEO, stated on Thursday that mergers and acquisitions are not a priority for his group, amid renewed speculation about the future of domestic competitor.

In recent weeks, whispers about a possible tie-up between two German lenders have resurfaced due to concerns about bank profitability and reports that the German government may sell some of its company stakes.

Despite retaining a 15% stake in Commerzbank, Finance Minister Christian Lindner has expressed a willingness to sell it, according to a report by Reuters earlier this week.

The merger of Germany's two largest banks would result in a combined entity with approximately $2 trillion in assets, but Deutsche Bank's low valuation could make the move challenging. The bank's stock trades at around 12 euros per share, which is significantly lower than its book value. As a result, a significant portion of assets would need to be marked down.

In an interview with CNBC at the World Economic Forum in Davos, Switzerland on Thursday, Sewing seemed to dismiss the rumors, at least temporarily.

Sewing stated that M&A in the banking industry, particularly in Europe, is not at the top of his priority list. He has been saying for years that it must happen, but only if certain regulatory preconditions are met, including the finalization of the banking union.

"Given the rise in interest rates, it is important to consider fair value gaps in the mortgage books of many banks. However, I believe that this is not a top priority for this year."

The European Banking Union was established in 2014 with the objective of maintaining the stability of the bloc's banking and financial systems.

In December, the Italian parliament rejected reforms to the European Stability Mechanism, a bailout fund for the euro zone, despite approval from all other euro zone countries.

The banking union legislation, which is a crucial component of our common safety net, could not be implemented by the left bloc as described by Eurogroup President Paschal Donohoe.

"As a result, we are concentrating on our own business," Sewing stated. "If there are opportunities and alternatives for smaller add-ons within our own business, like we have with Numis, then we are considering them."