In what looks
like a major milestonein the German banking industry,
Commerz bank, the second largest bank in Germany,
is acquiring its competitor and third largest bank
in the3 country, Dresdner for a little below ¤10
bn. The German banking industry has not witnessed
such a major consolidation for a long time. At the
time, when the global banking sector has witnessed
some of the biggest mergers resulting in creatin of
huge banks with enormous capital and business base,
the German banks have repeatedly floundered on every
opportunity to consolidate resulting in a highly-fragmented
industry with many private sector, public sector and
cooperative banks. Deutsche Bank, the largest bank
in Germany, stands in the 32nd place in
terms of market value. This is followed by Commerzbank,
which occupies 82nd place. This acquisition
is expected to reign in a phase of consolidation in
the German banking industry.
Allianz, which
acquired Dresdner for ¤24 bn in 2001 and tried
desperately to restructure it eventually sold its
100% stake in Dresdner to Commerzbank for ¤8.8
bn. In addition, Allianz receives payment into a trust
for specific ABS assets of Dresdner Bank for ¤975
mn. The cash and share exchange deal is approved by
the boards of both the banks and the deal is expected
to take place in two steps and will be completed by
the end of 2009.
In the first
step, Commerzbank will acquire 60.2% of Dresdner by
the beginning of 2009. At the same time, Allianz receive
approximately 163.5 million shares of Commerzbank
which will represent 18.4% of the Commerzbank shareholding.
Also, Commerzbank will pay 1.6 bn in cash and sell
significant part of the asset management activity
(around ¤700 mn) to Allianz. In the second step,
Dresdner will be merged with Commerzbank by acquiring
its remaining 39.8% stake. At the same time, Allianz
will receive Commerzbank's shares which at the present
rate will end up eventually taking 30% of the Commerzbank
stake in total.
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