Goldman Sachs Downgrades Deutsche Bank to Neutral, Commerzbank to Sell

Goldman Sachs downgraded Deutsche Bank to Neutral from Buy and Commerzbank to Sell from Neutral, citing changes in valuation after their stocks outperformed year-to-date. The firm attributed the downgrades to better growth, a steeper rates backdrop, and consistent beats and improvements in profitability.

Goldman Sachs has downgraded Deutsche Bank (NYSE:DB) to Neutral from Buy and Commerzbank (OTCPK:CRZBF) (OTCPK:CRZBY) to Sell from Neutral, reflecting changes in valuation following their stocks' strong year-to-date performance. The analyst Chris Hallam cited better growth, a steeper rates backdrop, and consistent improvements in profitability as the reasons for the downgrades [1].

Hallam noted that European banks have outperformed broader European equities, driven by factors such as improved growth prospects and a more favorable interest rate environment. Despite the downgrades, Hallam remains constructive about the outlook for European banks, predicting an average 10% upside to Goldman's updated 12-month price targets and a 20% upside for several Buy-rated names [1].

UniCredit's strategic build-up of a 26% stake in Commerzbank, valued at €10.7 billion, aims to leverage Commerzbank's robust SME lending network. However, this move faces political resistance and regulatory scrutiny, with Germany's 12.1% ownership and the July 2025 antitrust review as critical hurdles [2].

Investors should closely monitor the July 2025 antitrust review, UniCredit's CET1 ratio, and Commerzbank's EBITDA growth to assess the long-term viability of the consolidation [2]. The potential merger could create a €1.5 trillion banking giant, but faces risks from regulatory delays and market fragmentation [3].

References:
1. [1] https://seekingalpha.com/news/4489329-deutsche-bank-cut-to-neutral-commerzbank-cut-to-sell-at-goldman
2. [2] https://www.ainvest.com/news/unicredit-strategic-build-commerzbank-path-dominance-european-banking-2508/
3. [3] https://www.ainvest.com/news/high-stakes-game-european-banking-consolidation-unicredit-pursuit-commerzbank-strategic-implications-2508/