The extent of problems at Dresdner Bank became clear today as it pulled former parent Allianz into a worse-than-expected loss in 2008, its first in six years.
Europe's biggest insurer sold Dresdner to Commerzbank in a deal completed last month but not before writedowns linked to the sale dragged Allianz to a €2.4 billion ($3.1 billion) net loss.
The losses at Dresdner, which Allianz said amounted to €6.4 billion last year and nearly €3 billion in the fourth quarter alone, prompted the head of new owner Commerzbank to make a separate statement.
"The crisis persists and we still have a difficult road to travel, but we are sure the new Commerzbank will prevail as a growing and strongly profitable bank," said Commerzbank chief executive Martin Blessing, promising to deal quickly with Dresdner's wayward investment bank, Dresdner Kleinwort.
"Dresdner Bank's billions of losses over the past year distract from the fact that the private and corporate customers business and important parts of the investment banking activities of Dresdner Bank are fundamentally healthy," Mr Blessing said.
Allianz struggled to manage Dresdner after buying it for €24 billion in 2001 in the hope of big gains from cross-selling insurance and banking services. Investors are relieved its problem child has now found a new home.
Analysts on average had expected Europe's biggest insurer to report a net loss of €1.9 billion, after posting a record €8 billion profit in 2007. Shares in Commerzbank were indicated 4 per cent higher in premarket trading in Frankfurt while Allianz was expected to open slightly down.
Allianz's share has fallen by more than half over the last six months, slightly worse than peers in the DJ Stoxx European insurance index but faring better than the comparable European banks index, down more than 60 per cent.
According to StarMine, which weights analysts' forecasts according to their track record, Allianz trades at 4.6 times 12-month forward earnings, a premium to rivals such as France's AXA and Dutch group ING, which trade at a multiple of below 4.
Reuters