Dresdner Bank unit has been in little doubt, being, rather, more a
question of who would be the buyer. The question has been answered
with the news that Allianz is to sell Dresdner to Commerzbank and
embark on an alternative bancassurance strategy in Germany.
Speculation over the future of Allianz’s Dresdner Bank has been
rife. This year included as possible buyers were UK bank Lloyds
TSB, Spanish bank Banco Santander and Chinese bank China
Development Bank. The guessing game is over with the announcement
that the European insurer is to sell wholly-owned Dresdner,
Germany’s third-largest bank, to larger rival Commerzbank in a deal
worth €9.8 billion ($13.7 billion).
The deal with Commerzbank will create Germany’s second-largest bank
– though in terms of total assets it will only be about half the
size of Deutsche Bank, the country’s largest bank. Deutsche Bank
itself was involved in an abortive bid to acquire Dresdner in 2000
in a move then hailed as the start of much-needed consolidation in
Germany’s fragmented banking industry.
The deal between Allianz and Commerzbank is a major step in the
direction of industry consolidation, stressed Michael Diekmann, CEO
of Allianz which acquired full control of Dresdner for €23.3
billion in 2001. Allianz’s acquisition of Dresdner in 2001 marked a
surprising, and ultimately costly, about-turn for a company whose
then CEO Henning Schulte-Noelle had long stressed that banks and
insurers do not belong together.
Commenting, Commerzbank’s chairman of the board of managing
directors, Martin Blessing said enthusiastically: “Commerzbank and
Dresdner Bank are a terrific match. We have outstanding growth
prospects and the most effective distribution platform in the
German banking industry.”
The transaction between Allianz and Commerzbank, which is expected
to be completed no later than the end of 2009, will take place in
In the first phase, Commerzbank will acquire 60.2 percent of
Dresdner Bank from Allianz in exchange for which Allianz will
receive 163.5 million new shares in Commerzbank, equivalent to an
18.4 percent share of the increased share capital of Commerzbank.
On the basis of the average closing price during August, these
shares are worth €3.4 billion.
Commerzbank will also pay Allianz an additional €2.5 billion in
cash, €975 million of which will be provided as coverage for
certain asset backed securities (ABS) and will only be paid out if
not needed by 30 August 2018. Commerzbank will provide an
additional €275 million in ABS coverage.
In addition, in the first phase, Commerzbank will transfer to
Allianz its asset management unit Cominvest which is valued under
the terms of the deal at €700 million. Founded in 1950, Cominvest
will bring with it assets under management (AUM) of €57 billion,
increasing Allianz’s AUM to €326 billion. As a result Allianz will
shift from second into top position in Germany’s asset management
market, ousting Deutsche Bank which had AUM of €270 billion on 30
In the second phase of the transaction Dresdner Bank will be merged
with Commerzbank, Allianz receiving in the process shares worth a
further €3 billion for its remaining 39.8 percent remaining stake
in Dresdner. When the transaction is finalised Allianz will have a
stake of almost 30 percent in Commerzbank making it by far the
bank’s biggest shareholder. Though not yet specified a modification
of Commerzbank’s name appears in the offing.
According to Commerzbank restructuring costs of €2 billion will be
booked in 2009. Cost savings of €5 billion will be realised,
predominantly by 2011. As a result of the merger about some 9,000
full-time positions will become redundant out of a combined total
of nearly 67,000 employees.
How many redundancies are planned for Dresdner’s investment banking
unit Dresdner Kleinwort is unknown. However, a source of many
headaches for Allianz over the years Dresdner Kleinwort’s future,
at least in its current form, must be in doubt. Notably, in the six
months to 30 June 2008, Dresdner’s investment banking unit chalked
up a net dealing loss of €1.189 billion. This followed a €1.3
billion write-down of its trading book in 2007.
On completion of the transaction, Commerzbank will have 11 million
private customers and 100,000 corporate and institutional clients
and will offer Allianz’ insurance products through an exclusive
sales agreement. Allianz Global Investors will also be
Commerzbank’s preferred partner in the asset management business. A
bancassurance agreement between Commerzbank and Italian insurer
Assicurazioni Generali will not be continued after expiry in
In a presentation Diekmann and other senior Allianz executives
stressed the significance of the bancassurance alliance with
Commerzbank. They explained that the alliance will increase the
bancassurance target market by 75 percent, from Dresdner’s existing
6.3 million private clients to a combined 11 million, while the
number of bank branches covered will increase from 900 to 1,540
with rationalisation cutting branch numbers to 1,200 by 2012.
Based on 2007 results Dresdner and Commerzbank’s combined life and
health insurance new business totalled €2.4 billion, equivalent to
17.8 percent of Allianz’s German unit’s total life and health
premium income of €13.5 billion in 2007. Alliance predicts that
bancassurance volumes will more than double by 2011.
In addition to the bancassurance alliance with Commerzbank, Allianz
also announced that it is to form a new wholly-owned bank with its
existing 89 percent owned unit Oldenburgische Landesbank (OL) as
the main retail banking and service supplier. Under terms of the
deal with Commerzbank 1 million existing Dresdner clients will be
added to OL’s existing client base of 400,000.
“By OLB remaining part of the group we keep a competent bank to
further expand the banking product distribution via Allianz’s tied
agents,” said Michael Diekmann. Allianz has over 10,000 tied agents
in Germany and plans “significant” additional investment in what it