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Deutsche-Commerzbank merger could rest on mountain of ‘badwill’

Combined bank could recognise a profit of more than $18bn using an obscure accounting method

Deutsche Bank will likely depend on an obscure but valuable accounting quirk to make a deal for smaller rival Commerzbank workable.

Deutsche Bank has told investors and others close to the bank that it hopes European Central Bank supervisors will allow wide latitude to use the accounting treatment — known as negative goodwill, or so-called badwill — as part of a takeover, people familiar with the talks said.

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