Allianz's Plans Thrown into Limbo as Deutsche Bank and Dresdner Bank Merger Collapses

The merger of Deutsche Bank and Dresdner Bank collapsed on Wednesday, throwing Allianz AG Holding's plans into limbo. The merger's collapse has cast doubts on Allianz's chances of acquiring a prized asset-management business, a retail bank, and another insurance unit. The disagreement between the two banks centered on the fate of Dresdner Kleinwort Benson, an investment-banking unit that Deutsche Bank wanted to sell. The collapse of the agreement has left Allianz's acquisition plans uncertain, but the insurer remains financially strong and strategically well-positioned.

Key Takeaways:

• The merger of Deutsche Bank and Dresdner Bank collapsed due to a dispute over the fate of Dresdner Kleinwort Benson, an investment-banking unit.
• Allianz AG Holding's plans to acquire a prized asset-management business, a retail bank, and another insurance unit are now uncertain.
• The disagreement between the two banks centered on the integration of Dresdner Kleinwort Benson, with Deutsche Bank refusing to integrate the unit in a balanced way.
• The collapse of the agreement has left Allianz's acquisition plans uncertain, despite the insurer's financial strength and strategic positioning.
• Analysts had praised the agreement from Allianz's perspective, noting that it provided an urgently needed third-party asset manager in Germany and the opportunity to redeploy excess capital toward one of its highest priorities.
• Deutsche Bank 24 was billed as an important new distribution channel for Allianz's insurance and asset-management products.
• Allianz Chairman Henning Schulte-Noelle had touted the arrangement as signaling a new era for Germany's financial sector.

Statistics:

• The merger was valued at approximately $12.4 billion.
• Allianz stood to benefit from the merger, with Forbes estimating the deal to be worth $2.9 billion to the insurance giant.
• Deutsche Bank 24 was expected to provide an important new distribution channel for Allianz's insurance and asset-management products.
• A.M. Best Co.'s rating division had previously stated that Allianz's A++ (Superior) rating would not be affected by the transaction.

Sources:

• "German Bank Merger Collapses" by Brendan Noonan, international editor, A.M. Best Company, Inc. - Apr 05, 2000 - (http://www.comtexnews.com)
• "Allianz Hopes to Breathe New Life into Deals" by Anne Field, International Herald Tribune, 20 April, 2000.
• "Deutsche Bank 24" (http://www.deutschebank.de).
• "A.M. Best Co.'s Rating Division" (http://www.ambest.com).
• "Forbes" (http://www.forbes.com).