Allianz SE and Commerzbank AG have agreed on the sale of Dresdner Bank AG to Commerzbank for a consideration of 9.8 billion euros including a payment into a trust solution for specific ABS assets of Dresdner Bank of up to 975 million euros. The new bank will be the leading bank for retail and corporate clients in Germany. The supervisory board of Allianz approved the agreement at its meeting today. The transaction will take place in two steps and should be completed no later than the end of 2009. It is subject to approval by the regulatory authorities.
"This is a milestone in the consolidation of the German banking sector. With this step we selected the best solution for Dresdner Bank. Together, the two banks will be the German market leader for retail clients and medium-size companies," said Michael Diekmann, CEO of Allianz. "As a strong bank, the new company can safeguard jobs in the long term. With a stake of nearly 30 percent Allianz will be the largest shareholder of the new bank and will gain access to a powerful distribution network for its insurance products. The move will also secure the further success of its bancassurance strategy."
"The two banks fit together perfectly," commented Herbert Walter, CEO of Dresdner Bank AG. "Commerzbank and Dresdner Bank together will create a modern, strong and client focused bank. In the upcoming months we will put our joint efforts into shaping this new institution by focussing on earnings as well as cost synergies."
Transaction creates value added
The integration of the two banks creates a potential for improved efficiency and synergies that offers shareholders of the new bank the chance of significant value enhancement. Allianz, as the largest shareholder, will benefit from these gains. The cash equivalent of the synergies after deduction of restructuring costs amounts to 5.0 billion euros.
Commerzbank and Allianz will jointly provide risk coverage for selected ABS assets, whereby Commerzbank provides 275 million euros for the first loss piece and Allianz 975 million euros for the second loss piece.
Business models complement each other
Together Commerzbank and Dresdner Bank will have the most powerful sales organization in the German banking sector. Dresdner Bank’s proven securities expertise perfectly complements Commerzbank’s business model.
The new bank has a balanced mix of activities and an excellent potential for growth. It focuses on retail and corporate clients, medium-size companies, Central and Eastern Europe, corporates & markets (including public finance) and commercial real estate.
With 11 million private customers in Germany and the densest network of branches by far the two companies will become the leading German bank. With a total of 1,200 branches the bank will be even more accessible for private and business customers. At the same time it will have a broader range of products and will be in a position to increase its market share even further.
The two banks together will strengthen their already strong position among medium-size companies. The new bank will have more than 100,000 corporate and institutional clients. The bank stands as long-term partner by local companies and their needs.
The two banks also complement each other in the segment of high net-worth individuals. Dresdner Bank is very strong in this segment. This will help the new bank minimize the gap to the market leader and establish its position as number two in Germany in this market. Dresdner Bank has recently invested heavily in boosting its national and international presence, an asset the new bank will benefit from.
Dresdner Bank’s activities in investment banking will be reduced. Overall the new bank will strengthen its leading position as investment bank for German companies.
Exclusive sales cooperation ensures growth potential for Allianz and Allianz keeps OLB
The new bank will offer Allianz’ insurance products through an exclusive sales agreement. The cooperation hitherto of Commerzbank and Generali in the insurance field will not be continued after expiry. Moreover, Allianz Global Investors will be the preferred partner of the new bank in the asset management business. With the acquisition of Cominvest, Commerzbank’s asset management entity, Allianz strengthens its market position in this segment and will become Germany’s largest asset manager with more than 300 billion euros assets under management.
The successful assurbanking business of Allianz will continue to be promoted. More than a million new banking customers served by Allianz’ sales force will be transferred to a fully owned Allianz subsidiary. Furthermore the banking agencies distribution network will be expanded. Overall 300 banking agencies will support Allianz’ sales force by 2009. The Oldenburgische Landesbank (OLB) will remain in the Group as part of Allianz Deutschland AG. All banking products sold by Allianz will be purchased from Commerzbank and OLB.
"By means of this exclusive sales cooperation we are securing access to the expanded branch network of the new bank with 11 million customers. In this way we will be able to further strengthen our bancassurance strategy. By OLB remaining part of the Group we keep a competent bank to further expand the banking product distribution via Allianz’ tied agents," said Michael Diekmann.
The sale of Dresdner Bank will be realized in two steps: In the first step, Commerzbank will acquire 60.2 percent of the shares in Dresdner Bank from Allianz. In exchange Allianz will receive 163.5 million new shares in Commerzbank generated from a capital increase against contribution in kind, which is equivalent to a share of 18.4 percent of the increased share capital of Commerzbank. On the basis of the average XETRA closing price during the last month, these shares are worth 3.4 billion euros. Commerzbank will pay Allianz an additional 2.5 billion euros in cash. Thereof 975 million euros will be provided as coverage for defined securities portfolio and will only be paid out, if not needed by 2018. In the transaction Cominvest which is valued at 0.7 billion euros will be transferred to Allianz.
In the second step, Dresdner Bank will be merged with Commerzbank whereas Allianz will receive shares in Commerzbank worth 3.2 billion euros. The final stake in Commerzbank which Allianz will hold after the second step will depend on the exact exchange ratio of Commerzbank shares to Dresdner Bank shares. Allianz’ target stake in Commerzbank will amount to nearly 30 percent. This will make Allianz the largest shareholder by far and a strong partner of the new bank.
Allianz has been advised by Goldman Sachs, Shearman Sterling and Ernst & Young. Leonardo & Co will provide a fairness opinion for Allianz and Rothschild for Dresdner Bank.
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer.