Allianz, the giant German insurer, is expected to announce as early as tomorrow the sale of its retail and investment bank Dresdner to Commerzbank, with insiders expecting the takeover to be worth about €9bn (£7.2bn). Rumours earlier this year had linked Lloyds TSB with a possible rival bid.
The move, which will create a retail banking network to challenge the dominant German player Deutsche Bank, is set to complete at the second attempt, after a proposed merger collapsed back in 2000. Combined, the groups would have about 1,900 domestic branches and 12 million retail clients.
The move had been expected, with sources close to the talks saying by June that the all-German merger was a "done deal". It is understood to have the backing of the German government, despite fears from the unions that there could be a job cull. A source close to Allianz said yesterday that up to 9,000 of the two banks' combined 67,000 jobs could be at risk. Allianz is understood to have agreed during Thursday night a deal in principle to sell Dresdner to Commerzbank , but both sides have to put finishing touches on the agreement.
The details will be hammered out tomorrow as both companies' supervisory boards have called extraordinary meetings.
The news of the agreement suggests the Chinese have lost out, after the state-owned China Development Bank was understood to have held advanced talks on a possible deal. Banco Santander, the Spanish group which owns Abbey and this year agreed a deal for Alliance & Leicester, is among the companies that took a look at making a counterbid. Rumoured bidders included Deutsche Bank as well as Lloyds TSB.
Deal insiders said any agreement between the second and third biggest regional banks in Germany will be complex, especially regarding financing. Commerzbank is initially expected to take a 49 per cent stake, with an option to buy the rest at a later date.
There was some speculation this week that Commerzbank could also sell its 10 per cent stake in Linde, the industrial gases group, to raise funds for the takeover.
The future of Dresdner's investment bank Dresdner Kleinwort is unclear. Earlier this year, the group announced it was to split it off from the retail banking business, possibly precipitating a sale of the brokerage.
In a clear sign that Dresdner will be sold as a whole package, Allianz earlier this week announced that it had put that plan on hold.Reuse content