Dresdner Bank Abandons Merger with Deutsche Amid Breach of Trust Allegations

Strategic Insights -

Dresdner Bank's board, citing "breach of trust" by Deutsche Bank, announced the collapse of a planned 29bn euro merger, sparking speculation that Dresdner could be carved up between Allianz and Citigroup. The deal's collapse has raised questions about the future of Rolf Breuer, Deutsche Bank's CEO, and his handling of the acquisition of Dresdner Kleinwort Benson. Deutsche has been accused of attempting to sell DKB in whole or in part, undermining trust in the merger.

Key Takeaways:

  • Dresdner Bank's board unanimously decided to abandon the merger with Deutsche Bank due to breach of trust allegations.
  • Rolf Breuer, Deutsche Bank's CEO, is facing scrutiny over his handling of the acquisition of Dresdner Kleinwort Benson, with repeated U-turns on the company's future.
  • Deutsche Bank's behavior has been criticized for attempting to sell DKB in whole or in part, undermining trust in the merger.
  • The collapse of the deal has sparked speculation that Dresdner could be carved up between Allianz and Citigroup.
  • Shares in both banks surged 5%, while Allianz slumped 20% following the announcement.
  • A senior Dresdner banker stated that the bank had been given commitments internally about DKB, but Dr. Breuer's changes in stance caused the bank to walk away from the deal.
  • Analysts believe that Deutsche Bank's apparent indecision reflected a growing rift between Dr. Breuer and Josef Ackermann, Deutsche's head of investment banking.
  • Deutsche Bank may now resume its hunt for a US investment bank to buy, following the collapse of the deal.

Statistics:

  • The planned merger was worth 29bn euros.
  • Shares in Dresdner Banks surged 5% following the announcement.
  • Allianz slumped 20% following the announcement.
  • The deal's collapse has raised questions about the future of Rolf Breuer, Deutsche Bank's CEO.

Sources:

  • Dresdner Bank press release (exact wording: "Dresdner Bank dramatically pulled the plug on the planned 29bn euro merger with Deutsche accusing its larger rival of 'breach of trust' in its handling of the future of Dresdner Kleinwort Benson.")
  • Deutsche Bank press release (exact wording: "Deutsche Bank said Deutsche was 'not prepared to accept constructive suggestions to the integration of the investment banks along objective and rational criteria.')
  • Bloomberg article (citing "Bloomberg" as the source)
  • The Times article (citing "The Times" as the source)