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Bank consolidation talks in Germany under way, Allianz says

May 21, 2008, 11:17 GMT

Munich - Talks among some of Germany's big banks on consolidation are under way, the chief executive of insurance giant Allianz, Michael Diekmann, disclosed Wednesday. Through its ownership of Dresdner Bank, Allianz is one of the four big players in Germany along with Deutsche Bank, UniCredit of Italy and Commerzbank. Speaking to 4,000 Allianz shareholders in Munich, Diekmann said, 'Currently talks are taking place, but they have not advanced to a point where I have something to report to you from them.' He said he would not respond to questions about the talks for fear of weakening the Allianz negotiating position. Germany's banking sector is seen by many in the industry as ripe for mergers. However, many smaller banks are not for sale. Publicly owned savings banks, which cannot be privately owned, hold a very large market share. Postbank, the retail banking unit of mail-carrier Deutsche Post, is seen as the key prize for a future megabank. Allianz, which acquired Dresdner in 2001 for 23 billion euros (36 billion dollars) is seen as keen to back out of the investment. Diekmann said he saw a 'real-looking opportunity for significant consolidation in the German banking market.' Dresdner lost 513 million euros (800 million dollars) in the first quarter as it took a hit from the world financial crisis. A year earlier it had posted a quarterly profit of 612 million euros. Allianz, the parent, posted earnings for last year of 8 billion euros, the biggest profit of any top-30 German company, and Diekmann said he expected a 'a very good operating result' this year but gave no exact figure. Allianz shares dipped about 1 per cent Wednesday morning to below 128 euros.

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