Deutsche Bank and Dresdner in Talks on Mega-Merger
According to news reports, Deutsche Bank, Germany's largest
bank, and its rival Dresdner Bank are in merger talks that could create the
world's biggest bank.
On Monday night, the talks between the banks and their
advisors were said to be progressing positively and at an advanced stage, and
it was said that a formal announcement could come within days. However, the
talks could also be called off at any stage, as previous negotiations between
the two banks have collapsed. If the talks extend to a full-blown merger, the
combination of the two groups would create the world's largest bank with total
assets of around DM2,500bn ($1,228bn). If the two banks merge it is unclear
what the future would hold for the Dresdner Kleinwort Benson investment banking
The latest discussions come five months after Deutsche and
Dresdner announced that talks about a possible merger of their retail
operations had ended in failure. There is speculation that the latest talks
could involve divesting the banks' retail operations to Allianz, the German
financial services group which is a shareholder in both groups. Last year's
discussions, which came to light in August, involved merging their retail
businesses in a separate company, in which each would have owned equal shares.
Deutsche, Germany's largest private sector bank, has 1,600 branches, while
Dresdner the third largest behind HypoVereinsbank has 1,400.
Expectations of bank mergers were heightened recently when
the German government revealed plans to scrap taxes on sales of domestic
shareholdings. If passed, the move would allow the banks to sell off their
large industrial holdings and focus on core activities. The introduction of the
euro is forcing Europe's banks to compete for a bigger slice of a new
"domestic market", the European single market. As yet, no one bank
can claim to have established an extensive network across the region. Leading
banks now have to decide whether they want to remain regional players or become
European players, according to analysts. To become European players they will
have to acquire market share in several countries and to do that potential
buyers need to further increase their size and their concentration of capital.
Earlier this year Deutsche launched a rationalisation of
its retail and online banking unit, involving the loss of 1,200 jobs and the
closure of 250 branches.