RPT-German politicians split over bankrolling Deutsche Bank merger

(Repeats without change)

* Deutsche Bank in merger talks with state-backed rival

* German coalition partners divided on supporting deal

* State could be called on for funds or guarantee – official

By John O’Donnell and Michael Nienaber

BERLIN, March 21 (Reuters) – A political rift has emerged in Berlin over whether Germany should put its financial muscle behind a merger of Deutsche Bank and Commerzbank, politicians and officials said, complicating a bid to create Europe’s third-largest bank and fund it.

Germany’s two top banks have struggled to recover since the financial crisis and government officials, led by Finance Minister Olaf Scholz, are pushing for a merger to create a national banking champion and end questions over their future.

But a dispute is unfolding between the two political parties who govern Germany in coalition, a row that could reduce political momentum for a deal and derail any future agreement on whether or how Berlin should financially underpin a merged group.

One senior German official said that Scholz, a Social Democrat, had “gone it alone” in pushing for the deal without first securing the backing of Christian Democrats (CDU) in the coalition.

That official, who asked not to be named, said some Christian Democrats opposed Scholz’s drive because it could involve the state giving a guarantee on funding or contributing to a capital increase for a merged bank. That would mean Berlin, which already has a 15 percent stake in Commerzbank after a crisis-era bailout, would be on the hook again.

Scholz was the first to publicly reveal the merger talks earlier this month but he has since sought to distance himself from the process, insisting it is up to the companies to decide.

A spokesman said Scholz had “not voiced any position on the merger talks”, declining to comment on possible future government action.

But his stance…

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