Dresdner Bank, owned by Allianz, the German insurer, is to be split into two separate businesses in a move that increases the prospects for a sale of Dresdner Kleinwort, the investment banking branch.
The bank’s board said it would carve out the investment bank as distinct legal entity, citing ambitions to exploit a consolidating banking market.
Allianz has come under repeated pressure to exit investment banking because of the earnings volatility that the business has caused since it bought Dresdner in 2001.
Dresdner on Friday approved the creation of two distinct legal entities, separating the Dresdner Kleinwort investment bank from its retail banking activities.
Dresdner is to be the holding company for both businesses.
The bank said the move created “the necessary flexibility in order to play an active role in the ongoing consolidation of the banking market”.
The separation will also widen Allianz’s options in retail banking. The insurer hinted last month that it might be interested in buying Deutsche Postbank, the German retail bank.
Some analysts have argued that Postbank would be a better bancassurance partner than Dresdner, and have speculated that Allianz might want to sell its retail business rather than merge it if it succeeded in buying the lender.
Deutsche Post, Postbank’s majority owner, and the German government are expected to take a decision this year on Postbank’s future: it is expected to be a target for many German and international banks.
Allianz considered hiving off the investment bank in 2001 following its purchase of Dresdner but later concluded that the complexity of creating it as a separate legal entity was too great an obstacle. Shares in Allianz ended flat at €111.61.
Michael Diekmann, Allianz’s chief executive, said last month that he would “not enter into a strategic discussion about investment banking” in the wake of losses at Dresdner Kleinwort in the fourth quarter.
William Hawkins, analyst at Keefe Bruyette and Woods, said: “Breaking Dresdner Bank in half enables Allianz to investigate strategic alternatives, but there are so many strategic alternatives it could choose that it’s difficult to say whether this is a good or bad thing.”
By Chris Hughes and James Wilson
© Financial Times
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