Deutsche Bank, Commerzbank shares surge as merger talks begin

Shares of Deutsche Bank and Commerzbank surged on Monday after the German lenders confirmed they were in talks about a potential merger.

rose to the top of the pan-European STOXX 600, with shares gaining almost 7 percent, while shares were up nearly 4 percent. Over a 12-month period, shares of both companies are down by around 40 percent.

following months of speculation, after Deutsche Bank CEO Christian Sewing reportedly withdrew his opposition to a deal. Media reports that the German government, which owns 15 percent of Commerzbank, is backing the deal – even though it could cause a multi-billion euro financial hole – because it would force the re-valuation of the lenders‘ assets.

Those financial pitfalls could also be passed on to Germany‘s workforce. German Chancellor Angela Merkel‘s chief of staff said Monday that the government was looking into potential job losses if a merger went ahead. According to German union Verdi, 30,000 jobs could be at risk, Reuters reported.