COMMERZBANK SHARES fell more than 10 per cent yesterday in a downbeat reaction from the German bank’s investors to its €9.8 billion acquisition of Dresdner Bank, its domestic rival.
The acquisition combines Germany’s second and third largest banks to create a clear domestic rival to Deutsche Bank, with 11 million private customers. Some analysts questioned how much Commerzbank is paying for Dresdner and the timing of the move.
“A lot of people are looking at the risk the bank is taking on – especially at a time when the world economy is slowing,” an analyst said.
Commerzbank will finance a two-step acquisition valued at €8.8 billion through cash, its own shares and the transfer of assets to Allianz, which will become Commerzbank’s largest shareholder.
Commerzbank will also put €975 million into a trust to cover risks in Dresdner’s troubled portfolio of asset-backed securities.
The companies said the deal would create €5 billion of synergies after restructuring costs. Some 300 branches will be earmarked for closure, leaving 1,200 branches by 2012. The deal is also expected to lead to 9,000 job cuts by 2011. Shares in Allianz, the insurance group that is selling Dresdner in a two-stage deal, were flat at €114.14. Allianz will end up with a stake of about 30 per cent in Commerzbank.
