Frankfurt - The board of giant German insurer Allianz SE
agreed on Sunday to sell off its troubled Dresdner banking offshoot
to rival Commerzbank AG in deal triggering a major reshaping of the
country's fragmented banking business, Welt Online reported.
Analysts expect Commerzbank to pay up to 9 billion euros (13
billion dollars) to buy Dresdner with Welt Online saying Allianz and
Commerzbank negotiating teams reached a deal at a late night meeting
on Saturday.
A separate meeting of Commerzbank's supervisory board was also
predicted to sign off on merging Germany's second and third biggest
banks.
With total assets of about 1.09 trillion euros and 12.3 million
German customers, forging a new Commerzbank-Dresdner bank will result
in the emergence of new banking force in Europe's biggest economy.
However, Deutsche Bank AG, which failed in a bid to merge with
Dresdner eight years ago, would remain the largest bank in the
country with assets totalling about 2 trillion euros.
But the talk of the merger has already set the alarm bells
ringing among unions amid concerns that a corporate marriage between
the two banks could lead to job cuts of at least 10,000 from the
financial houses' combined workforce of about 72,000 employees.
Many of the around 1,900 German branches offices of a combined
Dresdner-Commerzbank bank are located close to each other.
According to media reports, under the deal, Frankfurt-based
Commerzbank will buy the 136-year-old Dresdner in two steps, starting
by acquiring 51 per cent of its cross-town rival this year and the
rest in 2009.
Sunday's announcement will be the climax of months of speculation
about a tie-up between Dresdner and Germany's second-biggest listed
bank which was triggered by Allianz's announcement in March that it
planned to sell off its banking operation.
The Commerzbank-Dresdner agreement is also likely result in a
shakeout at Dresdner's struggling investment house Dresdner
Kleinwort, which has been badly hit by the global financial market
crisis and the credit crunch.
Indeed, the negotiations over the possible sale of Dresdner to
Commerzbank have also been held against the backdrop of worries about
the impact on both banks of the fallout from the US subprime mortgage
market crisis.
While Dresdner this month posted its fourth consecutive quarterly
loss in the three months to the end of June, Commerzbank's mortgage
group Eurohypo has been forced to beef up its loss provisions.
Allianz paid about 23 billion euros for Dresdner in 2001 as part
of an ambitious plan to sell its pension and insurance schemes
through Dresdner's branch network.
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