Spain’s Santander Eyes Dresdner Bank – Sources

By | June 20, 2008

Spanish retail bank Santander is considering buying Dresdner Bank in the latest twist of Germany’s bank merger frenzy, according to people with direct knowledge of the matter.

The German banking industry is the throes of talks that could result in some of the country’s biggest names change hands this year.

Top retail bank Deutsche Postbank is up for sale while insurer Allianz is looking to spin off loss-making Dresdner. Meanwhile, Citigroup is selling its retail business here. Commerzbank, Germany’s second biggest bank, is already in advanced talks about a deal with Dresdner, whose retail business alone is estimated to be worth about €8 billion ($12.5 billion).

But some foreign banks are keen not to miss a rare chance to get a foothold in Europe’s biggest economy, whose banking market is largely closed to outsiders because of the dominance of not-for-profit community savings banks.

Three people told Reuters on Thursday that Santander may bid for Dresdner. News of Santander’s interest sent Allianz’s shares up 2 percent by 1357 GMT, making it the top gainer among German blue chips.

“That was a surprise,” said one trader. “If Allianz manages to get rid of Dresdner, it would be very positive. If there are now more interested parties lining up, then that looks more likely.”

Allianz’s share rise bucked declines in the indexes of European banking and insurance shares. Deutsche Bank was 0.8 percent lower while Santander was flat.

TEST MATCH
One source cautioned that the talks between Santander and Allianz were not as advanced as those between Commerzbank and Allianz, which bought Dresdner for €24 billion ($37.5 billion) in 2001. “The process is still in its early stages and there is no indication yet of who might have the best cards,” the source said.

Allianz has struggled to keep Dresdner profitable but has faced renewed criticism from shareholders after the bank ploughed into the red in the global credit crisis.

Its plan unveiled earlier this year to split Dresdner into a retail bank and an investment bank to prepare for a spin off boosted its stock price.

But the advances of Spain’s biggest lender will unsettle Germany’s flagship lender, Deutsche Bank, which does not want to see a foreigner muscle in on its home turf.

Separately, two people with knowledge of the matter said Deutsche was also conducting its own examination of Dresdner with a view to buying it.

Santander has won a reputation for being one of Europe’s most acquisitive banks after expanding strongly in Latin America and then pulling off the first major cross-border takeover in Europe, buying a British mortgage lender in 2004.

Last year, Europe’s second-largest bank bought Brazil’s Banco Real and Italy’s Antonveneta in a break-up of ABN AMRO. In Germany, it is active in consumer lending though Santander Consumer Bank.

With Chairman Emilio Botin saying he is open to “bargains”, many analysts expect it is only a matter of time before the bank starts buying again, having come through the credit crisis largely unscathed.

Speaking to journalists in the bank’s home town of Santander on Thursday, Botin said he would only talk about deals “when they’re done”.

Allianz and Deutsche Bank declined to comment.

(Reporting by Philipp Halstrick and Patricia Nann in Frankfurt; Additional reporting by Jane Barrett in Madrid; writing by John O’Donnell and Jonathan Gould; editing by Tony Austin)

By Christian Kraemer
MUNICH, June 19 (Reuters) –

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