Allianz Confirms Dresdner Talks – Deutsche Bank and Commerzbank Watch and Wait

March 30, 2001

“Allianz and Dresdner Bank confirm strategic talks concerning the creation of a leading integrated financial services provider for insurance, investment and banking services. The talks are in an advanced stage, but have not been completed yet,” said a brief announcement from Allianz headquarters in Munich.

Most of Europe’s financial community has known that something was in the works for a week or more, and speculation now centers on what Deutsche Bank and Commerzbank, Germany’s N°1 and N°4 respectively, will do, if Munich Re and HypoVereinsbank put together their deal along with Dresdner and Allianz. (See previous story).

One scenario expects the whole thing to fall apart, as previous German financial merger plans have. But a more likely case can be made this time for success. If so, it could leave DB and Commerzbank looking for partners. Allianz and Munich Re are Germany’s largest insurers. They effectively have no internal competition, but there are more than a number of European insurers lurking just across the border, who would just love to have greater access to Europe’s most lucrative financial market.

France’s AXA has already confirmed that it has held talks with Deutsche Bank, but DB’s CEO Rolf Breuer told Reuters News Agency that “The talks with AXA are far from any concrete result.” He then stated, “However, AXA is a highly significant negotiating partner and in any European-wide cooperation, AXA would be a partner of considerable weight.” If DB intends to fight Munich Re-HVB and Allianz-Dresdner for market share, it’s going to need a real heavyweight partner.

Italy’s Generali already has a 9.9 percent stake in Commerzbank, and is well established in the German market. It has also held talks with Dresdner after its merger deal with DB fell through, but they failed to reach any agreement. It now appears that Allianz, who owns 21.4 percent of Dresdner’s shares, has effectively taken it off the table. If AXA and DB conclude a deal that leaves Commerzbank as the odd man out, and vulnerable to a takeover. It may need a heavyweight partner even more than DB does.

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