The months-long, gruelling, at times almost absurd cliffhanger about the future of Dresdner Bank and Germany's banking landscape is finally over. A new "super bank" is being created.
Commerzbank's takeover of Dresdner Bank from insurer Allianz has made the bank the undisputed Number Two in German banking. Measured in terms of total assets the merged bank will only be half as big as market leader Deutsche Bank, but it will nevertheless be a true colossus with more than 60,000 employees, 12 million retail customers and around 1,800 branches.
Many think that Commerzbank's purchase of Dresdner Bank will be good for German banking.
Slow-witted chief executives of banks such as WestLB, KfW or IKB have made unbelievable mistakes with speculative deals that resulted in billions of euros in losses, for which taxpayers have had to foot the bill.
It's true that Dresdner Bank is regarded as a "poison pill" which may yet have huge hidden losses lurking in its portfolio, for example at its investment banking unit Dresdner Kleinwort. Allianz CEO Michael Diekmann will be happy to have rid himself of this troublesome asset, and has even shouldered billions in writedowns to do so: in 2001 Allianz, under Diekmann's predecessor Henning Schulte-Noelle, had bought Dresdner for 24 billion ($35.2 billion) in pursuit of the now failed strategy of creating a bancassurance group -- a one-stop shop offering the full array of financial products including insurance, retail banking, investment banking and asset management. Now Allianz has sold Dresdner for just 8.8 billion.
However, one can argue that Commerzbank combined with Dresdner could be just the kind of alternative to Deutsche Bank that the German government has been yearning for. The newly merged bank will be a strong financial player catering to small and medium-sized businesses, and as such will help the export-heavy German economy by providing companies with credit to expand abroad. That makes a welcome contrast to Deutsche Bank which, under CEO Josef Ackermann, acts like an investment bank steered from London and doesn't appear to have much heart for the domestic German economy.
One hopes that the new Commerzbank will take on the role of Kreditanstalt für Wiederaufbau, the state-owned development bank that has been run down by political mismanagement.
But for now, the merged bank and its employees face deep cutbacks. Two administrative units have to be merged into one, a process that will render 9,000 jobs redundant. In addition to back office staff, the employees working in the merged bank's combined 1,800 branches have reason to be worried. One doesn't need much imagination to predict what's going to happen in the many towns and cities that have a Commerzbank and a Dresdner Bank branch in the same street.
Dresdner Kleinwort's 3,000 investment bankers will be among the main victims of the deal. But sympathy for them will be limited, given that it was these high-earners in London who pushed the Dresdner group deep into the red. Commerzbank, by contrast, had long since lost interest in playing in the big league after it got burned by the failed megalomania of its former head of investment banking, Mehmet Dalman.
Would it have been better for the employees, and perhaps also for investors, if Dresdner had been sold to the second bidder, China Development Bank (CDB)? After all, the Chinese are reported to have offered several hundred million euros more for Dresdner, they were ready to pay "cash" and had pledged to guarantee there would be no job cuts or branch closures. CDB had also offered to provide Allianz with political assistance to sell its insurance products in China.
The answer is a definite no. Firstly, a takeover by CDB would have placed yet more of Germany's banking sector under foreign ownership after HypoVereinsbank was bought by Unicredit, part of Hypo Real Estate went to US investor flowers and IKB was sold off to US investor Lonestar.
Secondly, the Chinese never said or even hinted at what they planned to do with Dresdner and why they wanted to buy it. Such secrecy should not be rewarded. Besides, the takeover and subsequent closure of the Siemens mobile phone division by Taiwanese group BenQ is a deterrent example of how unscrupulous Asian companies can be when it comes to honoring agreements.
Against this background it is difficult to understand why trade unions lobbied and demonstrated in favor of a takeover of Dresdner by CDB. This stance is simply naďve, but it also casts a bad light on the state of Dresder. How troubled must a bank be if its employees want to flee unquestioningly into the arms of the Chinese, one has to wonder.
Commerzbank CEO Martin Blessing, the new strongman in Germany's banking sector, will now have his work cut out convincing staff of the merits of the deal.
The author is editor-in-chief of manager-magazin.de
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