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Deutsche, Commerzbank tentatively talk about merger after months of speculation: source

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FRANKFURT (Reuters) – The management board of Deutsche Bank has agreed to hold talks with rival Commerzbank on the feasibility of a merger, a person with knowledge of the matter told Reuters on Saturday.

FILE PHOTO: Christian Sewing, CEO of Deutsche Bank AG, addresses the media during the bank’s annual news conference in Frankfurt, Germany, February 1, 2019. REUTERS/Kai Pfaffenbach -/File Photo

First unofficial contacts took place within a very small group and the mandate from Deutsche’s board was given more than a week ago, said the source, speaking on condition of anonymity.

Talks were at a very early stage and could fall apart, the person added, confirming information reported earlier by the Welt am Sonntag newspaper.

A spokesman for Deutsche Bank and a spokeswoman for Commerzbank both declined to comment.

Speculation about a possible merger between Germany’s two largest listed lenders has been rife for months, heightening under the tenure of Finance Minister Olaf Scholz, who has emphasized the importance of strong banks.

Proponents of a merger say that a tie-up would give a combined entity — which would have an equity market value of more than 24 billion euros ($27 billion) based on Friday’s closing share prices — a 20 percent share of the German retail banking market.

That would allow it to potentially charge higher prices in a country where banking services have been free or low cost.

Welt am Sonntag reported that both banks were reacting to pressure from the government, which expects a decision on the merger in the coming weeks.

A spokesman for the finance ministry declined to comment on the report.

The two lenders, which flirted with a merger in 2016 before focusing on restructuring, have struggled to return to sustainable profitability since the global financial crisis.

The government holds a stake of more than 15 percent in Commerzbank following a bailout and Deutsche Bank’s shares have fallen 73 percent over the past five years.

Founded in 1870 to help companies with overseas trade, Deutsche is currently regarded as one of the most important banks in the global financial system, having expanded rapidly in the 1990s to become an investment banking giant.

However, its market share has dwindled since the financial crisis and it has been plagued by three years of losses, ratings downgrades, failed stress tests and money laundering scandals.

Its chief executive, Christian Sewing, has said publicly in recent months he was focused on restoring profitability before taking on a complicated merger project.

Sewing is expected to report back to the board before the bank takes further steps, the source said.

Commerzbank’s chief, Martin Zielke, has been more open to the idea of a tie-up, a person with knowledge of his thinking said. Last month, he said speculation about a merger was “understandable”.

A person familiar with the matter said in February that U.S. investor Cerberus Capital Management, a major shareholder in both Deutsche Bank and Commerzbank, was open to a merger, increasing the chances of a tie-up.

However, some of Deutsche Bank’s other key shareholders are opposed, stressing the need for patience to allow the bank to regain its footing.

Ratings agencies, which have cut Deutsche Bank’s credit ratings to the lowest among its major competitors, have warned that a merger would be risky and difficult to execute.

Labor unions have also voiced opposition fearing large job losses.

German officials have been worried about Deutsche since 2016 when the bank was negotiating a hefty fine with the U.S. Department of Justice for its role in the mortgage crisis.

At the time, Deutsche and the government publicly played down speculation that it could need state support. Behind the scenes, however, tensions were running high.

Over the past year, Deutsche has undergone an abrupt management change that installed Sewing as CEO. The bank has trimmed its international operations to focus more on retail banking and its home market.

Negative headlines about the lender have, however, continued.

In November, police searched the offices of all the members of Deutsche Bank’s board as part of an investigation into money laundering allegations linked to the Panama Papers.

Slideshow (3 Images)

Deutsche said in January that it had received requests for information from regulators and law enforcement agencies that are investigating a money laundering scheme involving Danske Bank.

In the U.S., Congress is also investigating money laundering allegations and the bank’s connections to the U.S. president, who owes the bank at least $130 million dollars.

Deutsche Bank has more than 20 million personal and business customers and Commerzbank around 18 million.

Reporting by Tom Sims and Andreas Framke; Additional reporting by Paul Carrel in Berlin; Editing by John Stonestreet and Kirsten Donovan

Our Standards:The Thomson Reuters Trust Principles.

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Second U.S. jury finds Bayer’s Roundup caused cancer

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(Reuters) – A U.S. jury on Tuesday found Bayer AG’s glyphosate-based Roundup weed killer caused cancer, a blow to the company eight months after another jury issued a $289 million verdict over similar claims in a different case.

FILE PHOTO: Monsanto’s Roundup weedkiller atomizers are displayed for sale at a garden shop near Brussels, Belgium November 27, 2017. REUTERS/Yves Herman/File Photo

Tuesday’s unanimous jury decision in San Francisco federal court, which came after five days of deliberation, was not a finding of Bayer’s liability for the cancer of plaintiff Edwin Hardeman. Liability and damages will be decided by the same jury in a second trial phase beginning on Wednesday.

Bayer, which denies allegations that glyphosate or Roundup cause cancer, in a statement on Tuesday said it was disappointed with the jury’s initial decision. Bayer acquired Monsanto, the longtime maker of Roundup, for $63 billion last year.

“We are confident the evidence in phase two will show that Monsanto’s conduct has been appropriate and the company should not be liable for Mr. Hardeman’s cancer,” the company said.

Glyphosate is the world’s most widely used weed killer. Monsanto’s Roundup was the first glyphosate-based weed killer but is no longer patent-protected and many other versions are now available. Bayer does not provide sales figures for the product.

The case was only the second of some 11,200 Roundup lawsuits to go to trial in the United States. Another California man was awarded $289 million in August after a state court jury found Roundup caused his cancer, sending Bayer shares plunging at the time. That award was later reduced to $78 million and is on appeal.

Bayer had claimed that jury was overly influenced by plaintiffs’ lawyers allegations of corporate misconduct and did not focus on the science.

U.S. District Judge Vince Chhabria called such evidence “a distraction” from the scientific question of whether glyphosate causes cancer. He split the Hardeman case into two phases: one to decide causation, the other to determine Bayer’s potential liability and damages.

Under Chhabria’s order, the second phase would only take place if the jury found Roundup to be a substantial factor in causing Hardeman’s non-Hodgkin’s lymphoma. The jury found that it was on Tuesday.

NOT AN ABERRATION

Carl Tobias, a law professor at the University of Richmond, said Tuesday’s decision showed that the August jury verdict was not an aberration and that the Hardeman case could be an indication of what may happen in future similar cases.

Some legal experts had said Chhabria’s decision was beneficial to Bayer, which says decades of studies and regulatory evaluations have shown the weed killer to be safe for human use.

“We will only really know whether it works for Bayer to isolate scientific issues once we see more trials,” said Adam Zimmerman, a law professor focusing on mass torts at Los Angeles-based Loyola Law School.

Chhabria has scheduled another bellwether trial for May and a third trial is likely to take place this year. All three bellwether cases will be split into causation and liability phases.

The U.S. Environmental Protection Agency, the European Chemicals Agency and other regulators have found that glyphosate is not likely carcinogenic to humans. But the World Health Organization’s cancer arm in 2015 reached a different conclusion, classifying glyphosate as “probably carcinogenic to humans.”

In the trial’s second phase, Hardeman’s lawyers will be allowed to present evidence allegedly showing the company’s efforts to improperly influence scientists, regulators and the public about the safety of Roundup.

Hardeman’s lawyers, Aimee Wagstaff and Jennifer Moore, said they look forward to presenting that evidence to the jury to hold Monsanto accountable.

FILE PHOTO: Logo of Bayer AG is pictured at the annual results news conference of the German drugmaker in Leverkusen, Germany February 27, 2019. REUTERS/Wolfgang Rattay

“Now we can focus on the evidence that Monsanto has not taken a responsible, objective approach to the safety of Roundup,” they said in a statement.

Chhabria is overseeing more than 760 Roundup cases for which Hardeman’s was a so-called bellwether trial intended to help determine the range of damages and define settlement options for the others.

Another Roundup trial is scheduled to begin in California state court in Oakland on March 28, involving a couple who claim Roundup caused their non-Hodgkin’s lymphoma.

Reporting by Jim Christie in San Francisco; Additional reporting and writing by Tina Bellon in New York; Editing by Bill Berkrot

Our Standards:The Thomson Reuters Trust Principles.

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U.S.-backed SDF says captures Islamic State camp but fight not over

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A fighter of Syrian Democratic Forces gestures in the village of Baghouz, Deir Al Zor province, Syria, March 18, 2019. REUTERS/Stringer

DEIR AL-ZOR PROVINCE, Syria (Reuters) – U.S.-backed fighters said they took a big step towards eradicating Islamic State’s last territorial possession in eastern Syria on Monday, seizing the jihadist camp at Baghouz and cornering remaining fighters against the Euphrates river.

“This is not a victory announcement, but a significant progress in the fight against Daesh,” said Mustafa Bali, an SDF media official on Twitter.

“The camp is under full SDF control. Not the end of operation yet,” another official with the militia said.

Some Islamic State militants were still confined to a tiny area on the bank of the Euphrates River and had yet to surrender, the official said in a note circulated to journalists.

“Clashes are going on in Baghouz right now. They hold some families as human shields,” the official added.

The camp was the biggest remaining area held by Islamic State in Baghouz, itself the last populated area the jihadist group held from the third of Syria and Iraq it suddenly seized in 2014.

Over the past two months, more than 60,000 people have poured out of the group’s dwindling enclave, nearly half of whom were surrendering supporters of Islamic State, including some 5,000 fighters.

However, while the capture of Baghouz will mark a milestone in the battle against Islamic State, regional and Western officials say the group will remain a threat.

(GRAPHIC – How Islamic State lost Syria: tmsnrt.rs/2O7l4mN)

Reporting by Angus McDowall, Tom Perry and a Reuters reporter in Deir al-Zor province; Editing by Alison Williams

Our Standards:The Thomson Reuters Trust Principles.

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U.S.-backed SDF says it captured 157 militants, mostly foreigners

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DEIR AL-ZOR PROVINCE, Syria (Reuters) – U.S.-backed fighters besieging the last shred of Islamic State territory in eastern Syria said on Tuesday they had captured 157 mostly foreign fighters as they tracked efforts by jihadists to escape the enclave.

A fighter of Syrian Democratic Forces gestures in the village of Baghouz, Deir Al Zor province, Syria, March 18, 2019. REUTERS/Stringer

“Our units monitored a group of terrorists, trailed them and captured 157 fully militarily equipped terrorists,” a statement by the Syrian Democratic Forces (SDF) militia said.

Islamic State’s Baghouz pocket is tiny, wedged between the Euphrates river and a row of hills at the Iraqi border. It is crammed with vehicles and makeshift shelters and pummeled at night by artillery and air strikes.

(GRAPHIC – How Islamic State lost Syria: tmsnrt.rs/2O7l4mN)

It is the last populated area remaining to Islamic State from the third of Syria and Iraq it suddenly seized in 2014 before its cruelties and attacks brought together local and foreign countries to push it back.

The captured jihadists were “mostly foreign nationals” said Mustafa Bali, head of the SDF’s media office, on Twitter. Neither he nor the SDF statement said when the capture took place.

Both the SDF and the U.S.-led coalition that backs it have said the remaining Islamic State militants inside the Baghouz pocket are among its most hardened foreign operatives.

Over the past two months, more than 60,000 people have poured out of the group’s dwindling enclave, nearly half of whom were surrendering supporters of Islamic State, including some 5,000 fighters.

However, while the capture of Baghouz will mark a milestone in the battle against Islamic State, regional and Western officials say the group will remain a threat.

Some of its fighters hold out in the central Syrian desert and others have gone underground in Iraq to stage a series of shootings and kidnappings.

Nobody knows how many remain inside the last scrap of ground. Reuters footage of the encampment on Monday showed large explosions there and smoke billowing overhead with the sound of gunshots.

On Monday night Islamic State released an audio recording of its spokesman, Abi al-Hassan al-Muhajer, saying the group would stay strong.

“Do you think the displacement of the weak and poor out of Baghouz will weaken the Islamic State? No,” he said.

Reporting by Angus McDowall and a Reuters reporter in Deir al-Zor province; Editing by Alison Williams

Our Standards:The Thomson Reuters Trust Principles.

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