16,000 jobs to be shed in bank merger

Deutsche Bank and Dresdner Bank will shed 16,000 jobs in the next two years in a planned merger that will create the world's biggest bank, according to industry sources.

The supervisory boards of both banks met yesterday afternoon to discuss management plans for a share swap that will speed up corporate restructuring in Europe's largest economy. Details of the merger are expected to be revealed at a joint news conference today. Deutsche employs 450 people in the Republic. A source at its IFSC operation dismissed any hint of rationalisation here. Employees are expected to receive more details today.

Executives at Dresdner Bank, which employs 50 people at the IFSC, were not available for comment.

The proposed deal, forging a bank with #1.25 trillion (£984 billion) in assets, will herald the banks' gradual exit from mass retail banking and allow them to focus on more lucrative asset management and wholesale banking.

Insurance giant Allianz, which holds about 22 per cent of Dresdner and 5 per cent of Deutsche, will take a major stake in the banks' retail operations and thereby secure outlets for its investment banking products.

It will also gain control of Deutsche's DWS asset management arm, which has funds under management of almost #105 billion. Of the three institutions involved in the deal, Allianz employs the most people in the Republic, around 850. It holds a 66.3 per cent stake in the insurance company, Church and General, which announced it would trade under the Allianz brand name in October 1999.

Another 35 people are employed at Allianz Worldwide Care, which announced it was to set up in the Republic in November 1999. "There is no possibility of a loss of jobs - this thing will probably give greater opportunities," said Mr Ron Buchan, the company's chief executive. Mr Buchan said he expected the number of staff to increase to around 100 in the future.

Industry sources said 16,000 jobs, or 11 per cent of the new group's combined 142,000 workforce, would be shed. Union fears that as many as 30 per cent of jobs may be axed were "wildly exaggerated", sources said.

About a third of the combined bank's 3,000 branches will close.

The deal will be presented as a merger of equals, but analysts said it will be a clear takeover by Deutsche of Dresdner, which has disappointed investors with inadequate core earnings growth.