FRANKFURT (Thomson Financial) - The German banking sector braced Sunday for insurance group Allianz to unveil who would buy its Dresdner Bank unit, with rival Commerzbank and state-owned China Development Bank tipped as leading candidates.
Neither Allianz nor Commerzbank would confirm their supervisory boards were meeting, but the former said Friday it was in 'advanced talks' on the future of Dresdner Bank, and a source close to the matter said Commerzbank directors had gathered in Frankfurt on Sunday.
Allianz, the biggest European insurance group, paid around 21 billion euros (31 billion dollars) for Dresdner seven years ago in a gamble it could make a profit from combined insurance and banking activities.
CDB and Commerzbank were widely considered front runners in the sale, with the former believed to have offered more money for Dresdner, along with the prospect of fewer job losses.
Political considerations could hamper CDB's chances however, analysts said.
The 135-year-old Dresdner Bank was believed to be worth around nine billion euros, and a tie-up with Commerzbank would allow the latter to strengthen its relationships with Germany's successful 'Mittlestand' industrial companies.
Observers said Dresdner's investment banking division, which suffered successive quarterly losses following the meltdown of the US market for high-risk, or subprime, mortgages a year ago, could see heavy job cuts in London and Frankfurt if Commerzbank emerged as they buyer.
Some sources claimed that a Commerzbank-Dresdner Bank combination would lead to the loss of up to 12,000 posts.
But the head of Dresdner's works committee, Hans-Georg Binder, told the mass market Bild am Sonntag newspaper that he estimated 4,000 jobs would go, and that some would be at Commerzbank.
Around 950 Dresdner sites would change their name, Binder added, while a combination of Commerzbank and Dresdner gets started with more than 1,800 branches in Germany.
According to press reports on Friday which cited sources close to the talks, Commerzbank could buy Dresdner in two stages, taking a 51 percent stake first in exchange for 30 percent of its own shares.
A deal would mark a significant step in the unfolding consolidation of Germany's banking sector, although numerous local public savings banks and co-operative banks would still play a leading role.
A newly-combined German bank would have total assets of around 1.09 trillion euros but still trail far behind number one Deutsche Bank, with 1.99 trillion euros. tf.TFN-Europe_newsdesk@thomsonreuters.com wj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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