The Wall Street Journal reported that in a bid to pose a challenge to the Deutsche Bank AG, the second largest bank in Germany, Commerzbank AG was all set to take over the third largest bank, Dresdner Bank AG for a sum of $13.2 billion.
This transaction was announced on Sunday. It was endorsed by Allianz SE, one of the owners of the Dresdner board, according to the journal. According to Allianz’s statement on Friday, negotiations and talks are at an advanced stage though fingers are crossed as to the outcome. The bank emerging from this deal is set to have around 1692 branches, the highest in Germany according to the journal which also went on to report that the deal would be going through in two phases in the following year. A J.P. Morgan research note which was published this week, also indicates eleven percent market share in lending for this bank.
With the culmination of this deal, Allianz’s seven-year relationship with Dresdner comes to an end. Allianz had acquired the German’s bank’s assests worth $22 billion, though this did not help in any way as credits accumulated rapidly for the Dresdner Kleinwort Investment banking unit, even with sale of insurance products across branches all over. Commerzbank has plans to scale down its activities on investment banking and cutting down at least ten thousand jobs in the investment banking unit of Dresdner. According to them doing this should help them to finance the deal. Apart from Commerzbank, China Development Bank was the only other bidder in the fray.