German shipping lenders Deutsche Bank (DB) and Commerzbank have begun merger talks in a bid to create Europe's second-largest banking group.
Only HSBC would be bigger if the two sides pull off a deal, after confirming discussions this week.
DB said: "In light of arising opportunities, the management board of Deutsche Bank has decided to review strategic options.
"In doing so, the management board of Deutsche Bank is focused on improving the growth profile and profitability of the bank.
"There is no certainty that any transaction will occur."
Both lenders have been cutting back on shipping transactions in recent years.
Analysts at Barclays said that the “status quo is not sustainable in the long term” for Deutsche Bank, but added that a Commerzbank tie-up is not a "silver bullet".
“Merging with Commerzbank could realise some cost synergies,” they added.
“Nevertheless, this would involve significant execution risk and the benefits might not be apparent for many years.”
Commerzbank has offloaded EUR 5.1bn ($5.75bn) of legacy loans as its shipping book dwindles.
The asset and capital recovery (ACR) segment continued to run down its portfolios, with maritime loans cut to less than EUR 500m in 2018.
This related to fewer than 60 ships.
The risk result for ACR came in at only EUR 8m due to the much lower volumes.
And the ACR operating result showed a sharp increase to EUR 34m, against a loss of EUR 264m in 2017.
DB provisions unchanged
Provision for credit losses at Deutsche Bank was unchanged for 2018 at EUR 525m.
Risk-weighted assets were up at EUR 350m in the fourth quarter, from EUR 344m in 2017.
Last year, investment funds Oak Hill Advisors (OHA) and Varde Partners sealed an agreement to take $1bn of ship finance loans off the hands of DB.
The companies said they viewed the deal as part of their alternative offering of financing to shipowners.
