After weeks of speculation, Germany’s Allianz SE has announced the sale of its Dresdner Bank unit, the country’s third largest, to Commerzbank for €9.8 billion ($14.2289 billion). Allianz also said it has purchased Cominvest, Commerzbank’s asset management entity and will become the bank’s largest shareholder “with a stake of nearly 30 percent,” when the deal is completed.
As part of the transaction Allianz said it has agreed to fund a “trust solution for specific ABS assets of Dresdner Bank of up to €975 million [$1.41 billion],” which is designed to cover some of Dresdner’s potential downside risks.
Standard & Poor’s reacted positively to the announcement, affirming Allianz’ ‘AA’ ratings (see related article).
The sale opens a new chapter in Allianz efforts to combine its insurance activities with Germany’s banks. Allianz bought Dresdner in 2001 for around $20 billion (See IJ web site – https://www.insurancejournal.com/news/international/2001/04/02/12829.htm). The expected synergies – bank customers buying insurance/insurance customers using banking services – never reached the hoped for levels. In addition Allianz has had to repeatedly shore up Dresdner’s finances after a series of losses that have also impacted Allianz’ overall profits.
The deal with Commerzbank may be more promising. It ranks slightly behind deutsche Bank in size and will be, according to Allianz, “the leading bank for retail and corporate clients in Germany.”
Allianz said: “The transaction will take place in two steps and should be completed no later than the end of 2009. It is subject to approval by the regulatory authorities.”
CEO Michael Diekmann added: “This is a milestone in the consolidation of the German banking sector. With this step we selected the best solution for Dresdner Bank. Together, the two banks will be the German market leader for retail clients and medium-size companies. As a strong bank, the new company can safeguard jobs in the long term. With a stake of nearly 30 percent Allianz will be the largest shareholder of the new bank and will gain access to a powerful distribution network for its insurance products. The move will also secure the further success of its bancassurance strategy.”
Although jobs may be “safeguarded in the long term,” the merger of the two banks is widely expected to eliminate around 9000 jobs, most of them in Germany.
Dresdner’s CEO Herbert Walter stated: “Commerzbank and Dresdner Bank together will create a modern, strong and client focused bank. In the upcoming months we will put our joint efforts into shaping this new institution by focussing on earnings as well as cost synergies.”
Source: Allianz SE – www.allianz.com
Topics Mergers & Acquisitions Allianz Germany
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