Dresdner Bank to cut 5,000 jobs

Dresdner originally planned to merge with Deutsche Bank

Germany's third largest bank Dresdner Bank is to cut 5,000 jobs in the next two to three years.

The bank announced the job cuts, as it revealed that profits had slumped in the first quarter.

The job cuts follow Dresdner's failed attempt at a merger with Deutsche Bank and are seen by some analysts as the only way Dresdner can remain competitive on its own.

Many of the job losses are expected to be in Dresdner's German retail banking network, with an estimated 300 branches expected to close.

Dresdner currently has around 1,150 branches in Germany employing 50,660 people from which it is expected to cut 2,900 jobs.

A further 2,100 jobs are expected to go from the bank's headquarters.

The bank is to invest 3.5bn euros ($3.1bn) in building up its corporate and investment banking business, its European private customer business and its e-business activities.

The company's chief executive Bernd Fahrholz said it planned to build up its internet banking unit Advance Bank.

"We want to secure Advance Bank as an internet brokerage," Mr Fahrholz said.

Dresdner to go it alone

The restructuring has been prompted by Dresdner's failed attempt to create a European banking giant by merging with Deutsche Bank.

Dresdner called off the $30bn merger on 5 April, as it accused Deutsche Bank of breaking their agreement by trying to sell off Dresdner Kleinwort Benson.

Many now see Dresdner as vulnerable to takeover from other banks. Its shares have fallen about 30% from the peak of 59 euros hit in March when the merger was announced.

The failure of the merger also hit the bank's first-quarter results.

In the first-quarter, its net profits fell 50% to 133m euros ($118.9m), thought in part to be as result of hefty payments to staff at Dresdner Kleinwort Benson - its investment banking arm - to encourage them to stay.

Many were unsettled by continued reports that the merger would lead to the sale of Dresdner Kleinwort Benson.

The bank is now determined to go it alone.

Chief executive Bernd Fahrholz said on Friday that Dresdner would "go forward on its own" at least for the next two or three years.