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Commerzbank buys ailing Dresdner | Commerzbank buys ailing Dresdner |
(about 1 hour later) | |
Germany's Commerzbank has agreed to buy Dresdner Bank from insurer Allianz in a deal worth 9.8bn euros ($14.4bn; £8bn). | Germany's Commerzbank has agreed to buy Dresdner Bank from insurer Allianz in a deal worth 9.8bn euros ($14.4bn; £8bn). |
The move will result in 9,000 job losses, with around 1,000 positions to be cut in the UK where Dresdner has substantial operations. | The move will result in 9,000 job losses, with around 1,000 positions to be cut in the UK where Dresdner has substantial operations. |
Dresdner had been hit hard by the sub-prime crisis and Allianz and Commerzbank are contributing 1.25bn euros to cover further losses. | Dresdner had been hit hard by the sub-prime crisis and Allianz and Commerzbank are contributing 1.25bn euros to cover further losses. |
The deal will create a real rival to Germany's largest bank, Deutsche Bank. | |
The combined group would be Germany's biggest bank in terms of customer numbers, although it would still be a distant number two to Deutsche Bank in terms of assets. | |
It is highly risky for Commerzbank to make such a bold deal on the eve of a sharp economic downturn in Germany Dirk Becker, Landsbanki Kepler See Commerzbank sharesSee Allianz shares | |
The price tag is less than the 14bn euros Allianz paid for Dresdner seven years ago. | The price tag is less than the 14bn euros Allianz paid for Dresdner seven years ago. |
Allianz will keep a 30% stake in Dresdner after a two-step transaction involving exchanges of both cash and stock. | Allianz will keep a 30% stake in Dresdner after a two-step transaction involving exchanges of both cash and stock. |
The deal will be completed by the end of 2009. | |
German hands | German hands |
The deal also keeps Dresdner in German hands. | The deal also keeps Dresdner in German hands. |
The company had attracted the attention of China Development Bank, a state-owned lender, which was reportedly prepared to pay a higher price. | The company had attracted the attention of China Development Bank, a state-owned lender, which was reportedly prepared to pay a higher price. |
COMMERZBANK & DRESDNER 11 million customers1,200 branches100,000 corporate and institutional clients | |
But such a deal would have required government approval from both Germany and China. | But such a deal would have required government approval from both Germany and China. |
Germany's finance minister Peer Steinbrueck said Commerzbank's purchase of Dresdner would benefit the country. | |
"It's good for Germany as a business location and strengthens it as a financial centre," Mr Steinbrueck's spokesman Torsten Albig said. | |
Commerzbank said the deal would help it expand in Germany and abroad. | Commerzbank said the deal would help it expand in Germany and abroad. |
"We are building a market leader with European significance, and are creating added value for our shareholders," Commerzbank chief executive Martin Blessing said. | "We are building a market leader with European significance, and are creating added value for our shareholders," Commerzbank chief executive Martin Blessing said. |
"At the same time, the deal will secure many attractive jobs for the long term, even though unfortunately we cannot keep all current positions." | "At the same time, the deal will secure many attractive jobs for the long term, even though unfortunately we cannot keep all current positions." |
Dresdner Kleinwort, the group's investment bank, is expected to bear the brunt of the London job losses as Commerzbank plans to scale down its activities in this area. | |
Shares hit | |
Commerzbank shares fell sharply in Monday trading as analysts feared that the deal would be costly and risky for the lender. | |
"We believe it is highly risky for Commerzbank to make such a bold deal on the eve of a sharp economic downturn in Germany," said Dirk Becker, a banking analyst at Landsbanki Kepler. | |
"Costs for integration and the downsizing of the investment bank could eat up the entire 2009 profit while the synergies will only come at a much later stage." | |
Commerzbank shares were down 6.42% at 18.8 euros. | |
Allianz shares slipped slightly. |
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