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Commercial banks

Dresdner and Commerzbank Weigh Equify Swap Amid Merger Uncertainty

Strategic Insights

— 1 min read

A plan by Dresdner Bank and Commerzbank, Germany's third-biggest and fourth-biggest banks, to dilute the holdings of CoBRa, a Commerzbank shareholder, has been initiated. The proposal involves an equity swap that would be accompanied by the rationalization of their retail banking divisions. Analysts believe that a full-scale merger would be improbable, as Dresdner's biggest shareholder and insurance partner, Allianz, would need to reach an agreement with Generali, the Italian insurance company and Commerzbank shareholder. Generali has an exclusive agreement to distribute insurance products through Commerzbank branches, complicating the merger prospects.

Key Takeaways:

  • Dresdner Bank and Commerzbank are considering an equity swap as part of a plan to dilute the holdings of CoBRa.
  • The share swap would be accompanied by rationalization of the banks' retail banking divisions.
  • Analysts believe that a full-scale merger between Dresdner and Commerzbank is unlikely due to the disagreements between their respective shareholders, particularly between Allianz and Generali.
  • Generali has an exclusive agreement with Commerzbank to distribute insurance products through their branches, hindering the merger process.
  • Dresdner Kleinwort Benson (DKB) has significant overlap with Commerzbank and employed 3,500 people in London as of the report.
  • DKB has already suffered in the wake of the abandoned merger plans between Deutsche and Dresdner.
  • Rebon, a Dutch company headed by Hans-georg Hoffman, represents 17% of Commerzbank shares and has been instrumental in pushing for the merger.
  • WCM, another Commerzbank shareholder headed by Karl Ehlerding, has expressed interest in a potential merger with HypoVereinsbank.

Statistics:

  • 3,500: The number of employees at Dresdner Kleinwort Benson (DKB) in London.
  • 1,000: The number of staff employed by Commerzbank in the UK.
  • 17: The percentage of Commerzbank shares represented by Rebon.
  • 2: Years for which Hans-georg Hoffman, former Dresdner board member, avoided paying millions of marks in tax.

Sources:

  • Copyright (C) The Times, 2000

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