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What's going on?

French multinational bank Socit Gnrale (a.k.a. SocGen)’s stock rose 1% on Tuesday as it announced a deal to enter Germany in a gro way (tweet this), buying businesses from German Commerzbank but theyve kept the price a secret.

What does this mean?

SocGens going to take over Commerzbanks investment products including exchange-traded funds (an area its already pretty big in), its investment management business (which looks after large pools of money for big institutions and wealthy individuals) and its business in helping investors to trade. Last year, those segments generated over $400 million in revenues for Commerzbank.

Why should I care?

For markets: Investors like it both ways.

SocGen is bulking while Commerzbank is cutting. SocGens stock perked up and investors seemed pleased probably because the deal completes the companys German footprint. Commerzbanks investors seemed to approve of the move, too, as the banks stock rose maybe because its in line with Commerzbanks new, simplified business plan. In its efforts to level up, Commerzbanks been pulling away from activities it sees as non-essential to its bread-and-butter business of serving private, small business customers and corporations. It estimates that offloading those investment products to SocGen will result in savings of at least $230 million by 2020.



The bigger picture: Germanys hot property for banks right now.

Germany is Europes largest economy, and it seems that several banks are trying to wriggle on in there. SocGen had some competition for Commerzbank, going toe to toe with US heavyweight Goldman Sachs. Fellow Frenchies BNP Paribas and Italian stallion UniCredit are said to have been in touch with the German government (which still owns part of Commerzbank). This could be due to Deutsche Bank’s recent troubles including a $2.75 billion loss in the last quarter of 2017 inviting other banks to compete.

Originally posted as part of the Finimize daily email.

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