As HSBC retrenches from domestic business on the continent, BNP Paribas steps up its ambition in Europe’s biggest economy – focusing largely on the family-owned Mittelstand.

Leveraging its prominent position as a facilitator of trade between Germany and frontier markets, Commerzbank has established a strong network of correspondent banks and institutional clients in these regions.

With a robust historical foundation as a key bank for the German Mittelstand – firms which collectively account for the largest share of the country's economic output – and a core partner for institutional clients, Commerzbank has leveraged its deep client relationships to drive advancements in providing FX services to its established client base in Germany.

Commerzbank has seen a remarkable bounce back in its profitability and share price over the past four years, something that was particularly apparent in 2023. The year began with its re-inclusion in the DAX in February, five years after it was ejected from the index of German blue-chip stocks. This was thanks to a dramatic recovery in its share price from the depths it hit during the early Covid-19 period.

After years of retrenchment, Commerzbank’s head of corporate clients Michael Kotzbauer tells Euromoney of a tentative return to growth. The bank has dodged Germany’s commercial real estate slump but is having to adapt to a worsening geopolitical backdrop. Capital and cost efficiency remain big priorities.

Record regional bank profits, plus strong capital ratios in Western Europe, have fuelled hope for more bank acquisitions in Central and Eastern Europe. The uncertain effect of recent court rulings on Swiss franc mortgages, however, is a big obstacle to deals in Poland.

Commerzbank has forged longstanding relationships and established bilateral credit lines with clients in frontier markets that few other banks support. This allows those clients access to international markets and competitive FX pricing that they would otherwise struggle to access.

For one of the most considerate men in capital markets, nothing was ever too much trouble.

After its DAX return, Commerzbank now has a clear – if uncertain – path to achieving its profit target, according to CFO Bettina Orlopp.

The European Central Bank has made it clear that it would look favourably on big bank mergers to create stronger pan-eurozone lenders. But M&A between large lenders in different eurozone states is still stalling through financial and political fragmentation – despite hopes for a closer union after Brexit and the war in Ukraine.

The former Commerzbank chief executive and co-head of wealth management at UBS heads a strong team to help company founders with running a public company.

As European bank consolidation finally gets under way, Euromoney looks at the financial firepower of the region’s top 20 players. Which banks are now best-placed to do the acquiring and which are at risk of being swallowed up? Mid-tier banks in southern Europe look especially vulnerable.

No golf please, I’m delivering: how the German bank’s new CEO sees himself.

Manfred Knof starts early next year, after Martin Zielke is ousted by Cerberus. He joins recently arrived chairman Hans-Jörg Vetter.

Everyone wanted radical change at Commerzbank, except the bank itself.

Firms such as Deposit Solutions and Raisin are thriving, partly because Europe’s wealthy are so risk averse.

The biggest challenge in German banking has suddenly gone from job cuts to handing out state-guaranteed loans as quickly as possible.

A few big banks in Germany, Switzerland and France pay the majority of the charges their central banks now levy on their reserves – Euromoney looks at which ones are worst affected and asks how they can manage the pain and maintain a conservative approach to liquidity and risk.

A merger is still CEO Martin Zielke’s only real hope.

Clients have had a much easier time than their banks in Germany, but fintech innovation is creating ways for the likes of Commerzbank and Deutsche Bank to thrive, even in the country’s SME heartlands.

As Europe’s financial conduct authorities get tougher, banks will be even less likely to support trade between the EU and states that are small and poor.

While Commerzbank might yet be an attractive partner in European consolidation, Deutsche is caught in a horrible cycle of continuing to cut costs to offset declining revenues.

Debate around the UniCredit-Commerzbank merger will centre on its impact on European banks’ share prices as Eurosceptic populism makes cost cutting more difficult.

Germany may conduct a strange experiment in state-sponsored investment banking if a merger between Deutsche Bank and Commerzbank proceeds.

However the situation plays out, it might be the smaller firm that ends up in the stronger position.

From Deutsche Bank to Santander or ING, banks in Europe need to change with the times and accept accountability to a wider public, represented by their governments: as with weak capital, deficient ethics will only entail greater state control.