Tax trouble may stymie DKB spin-off

PROBLEMS WITH the German tax authorities may force Dresdner Bank to shelve plans announced last month to hive off Dresdner Kleinwort Benson, its City investment banking arm, into a separate legal entity, writes Andrew Garfield.

The bank may have to make do with "a virtual investment bank", which would be separately branded with its own organisational structure, but remain an integral part of the parent bank from a legal and regulatory perspective.

DKB staff say privately that discussions about the form the structure would take were at an early stage when it decided to go public. Many doubt whether the asset transfer will be approved without a huge tax charge.