Allianz confirms Dresdner talks

Allianz wants to take over Dresdner, Germany's third largest bank.

Europe's largest insurer Allianz wants to buy Germany's third largest bank Dresdner to create the first bancassurance group in the country.

"Allianz and Dresdner Bank confirm strategic talks concerning the creation of a leading integrated financial services provider for insurance, investment and banking products," the insurer said.

Deutsche Bank is ready to work with a new bancassurance giant.

If the Allianz acquisition goes ahead, Germany's second largest bank, HypoVereinsbank and the reinsurer Munich Re may follow suit and create a second bancassurance group.

Similarly, the number one bank in Germany, Deutsche Bank, could be pressured into striking a deal with the French insurance company Axa.

A new giant

If Dresdner's shareholders accept an offer from Allianz, the new group will be worth an estimated 103bn euros (£63.4bn, $91.3bn).

Allianz, which already owns just more than a fifth of Dresdner, is expected to bid about 20bn euros to buy the remaining shares.

Analysts said it would make sense for both companies to join forces.

Allianz would strengthen its distribution network in a market where retirement saving is booming.

"It is a smart move from Allianz acquiring Dresdner. This will really change the financial environment in Germany and also in Europe," said Nordinvest fund manager Boris Böhm.

Third time lucky

The pressure for a shake-up of the financial sector in Germany has been on for months.

During 2000, Dresdner's merger talks with two of its major banking rivals in Germany, Deutsche Bank and Commerzbank, both failed.

Allianz has also been in talks with Deutsche Bank about cooperation in the distribution of financial products, and the bank's chief executive Rolf Breuer said discussions are still ongoing.

But the cooperation talks between Allianz and Deutsche have failed to deliver any agreements, even though they have been ongoing since last summer when the bank's merger talks with Dresdner collapsed.

Some observers say the latest discussions between Allianz and Dresdner is an indication that the insurer's talks with Deutsche have reached the end of the road.

However, Mr Breuer said Deutsche is open to cooperation with a new bancassurance giant if the deal is successful.