Economic and Financial Crisis

03/27/2008

Allianz to Spin Off Subsidiary

Chinese Buyer Eyes Dresdner Bank

A Chinese financial institution has made an offer to buy part of Germany's Dresdner Bank, according to a media report. Parent company Allianz is keen to get rid of its troubled subsidiary.

DDP

Dresdner Bank is up for sale.

Amid mass subprime-related write-downs and bailouts, Germany's troubled banking sector looks set for a fresh wave of consolidation. Now, large chunks of Germany's third-largest bank could end up in Chinese hands, a German newsmagazine has reported.

According to a report made available by SPIEGEL's sister publication Manager Magazin ahead of publication Friday, an unnamed Chinese bank is interested in taking over the investment banking and corporate banking units of Germany's Dresdner Bank.

Dresdner's parent company, the Munich-based insurance giant Allianz, announced earlier this month that it would split Dresdner into two divisions, with one focusing on retail banking and the other on investment banking. Allianz's internal plans to sell off its Frankfurt-based subsidiary are codenamed "Brazil" and "Chiemsee," according to Manager Magazin. The codename "Brazil" refers to plans to merge Dresdener's private banking activities with the German bank Postbank. If the merger were to go through, the new institution would have a market share of around 10 percent of German retail banking.

The "Chiemsee" project refers to the selling off of Dresdner's investment banking unit, Dresdner Kleinwort, together with Dresdner's business with its major corporate clients. The Chinese financial institution is interested in this part of the business and has already made Allianz a written offer, although it has not yet examined Dresdner Bank's books, according to Manager Magazin.

Analysts believe Allianz is determined to sell off Dresdner Bank, Germany's third-largest bank, in the medium term. If both "Brazil and "Chiemsee" fail, then the Allianz managers have a backup plan ready, which would involve merging Dresdner Bank with Germany's Commerzbank, the magazine reported.

Allianz acquired Dresdner Bank in 2001 for €24 billion. Since then it has carried out a series of restructurings in a bid to make it more competitive, without much success.

dgs/reuters

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