Dresdner sizes up major US bid

SHARES IN Germany's second-largest bank, Dresdner, fell almost 6 per cent yesterday on reports that it was in bid talks with the US broker PaineWebber. At an estimated price of $9bn-$10bn, it would be the largest- ever foreign purchase by a German bank and speculation focused on how Dresdner would finance such a deal.

The first option, an outright, unassisted purchase, would almost inevitably involve a capital increase as well as force Dresdner to realise much of its DM28bn hidden reserves. Secondly, a purchase could be made in co-operation with insurance giant Allianz, which owns about 22 per cent of Dresdner and which plans to increase its co-operation with the bank in asset management.

The third option, favoured by analysts, would involve a pooling of interests similar to the share swap employed in the Daimler-Chrysler merger. But analysts said it was unclear how a share swap could be organised given that Dresdner was not listed on Wall Street. Both banks declined to comment yesterday.