Martin Blessing, CEO of Commerzbank (left); Michael Diekmann, CEO of Allianz (centre); and Herbert Walter, CEO of Dresdner Bank, during a news conference in Frankfurt, central Germany, on Monday, announcing the merger between Commerzbank and Dresdner Bank. - AP
Commerzbank's purchase of German rival Dresdner Bank AG will cost thousands of jobs, but analysts said Monday it will benefit insurer Allianz SE, which agreed to sell Dresdner on the weekend in a €9.8 billion (US$14.44 billion) deal.
Shareholders appeared to agree, sending the Munich-based insurer's shares slightly higher in Frankfurt trading on Monday to €114.11 (US$168.14).
Commerzbank shares suffered because many analysts were concerned about the boldness of such a major purchase in a German economic environment where growth has contracted and business and consumer confidence are at multi-year lows. Shares of Commerzbank, Germany's second-biggest bank, slid nearly 7.4 per cent to €18.60 (US$27.41).
The deal comes with a heavy toll in terms of job cuts: 9,000 workers out of the combined banks' ranks of 67,000 workers will be eliminated, including back office, production and investment bankers.
Of those cuts, 6,500 will take place in Germany with the other 2,500 abroad.
Advantages
But by holding on to some 30 per cent of Dresdner Bank, Allianz will be able to continue selling its insurance products through the branches of the new bank, which will be Germany's biggest in terms of branches and customers, overtaking Deutsche Bank AG.
It will also get Cominvest, Commerzbank's asset manage-ment unit, which is worth €700 million (US$1 billion).
"All in all, we think that an almost 30 per cent stake in the new banking entity is not much less risky compared to the 100 per cent stake in Dresdner Bank in terms of the business mix," said Andreas Weese, an analyst with UniCredit in Munich. "However, advantages of the deal are the larger platform for the distribution of insurance products, the expansion of the asset management business via comdirect, and the participation in expected synergies."
The new bank will have 11 million private customers in Germany and a network of 1,200 branches peppered across Europe's biggest economy.
