Commerzbank to buy Allianzs Dresdner Bank

Written by Banking Bureau | Agencies | Frankfurt, Mumbai, Aug 30 | Updated: Aug 31 2008, 07:52am hrs
Even as Dresdner Bank, owned by Allianz, was about to begin its operation In India, it is being taken over by another major German bankCommerzbank AG.

A source with direct knowledge of the matter said on Friday that Allianz SE is set to sell control of Dresdner Bank to Commerzbank AG.

Dresdner Bank, which had withdrawn from India markets a few years ago had maintained a representative office in the country. Allianz, after setting up two insurance companies along with Bajaj Auto wanted to make use of Dresdners existing licence to enter into the Indian banking sector, including the retail space.

Allianz, after almost a year-long effort, had received regulatory permission from RBI to start the operations of Dresdner in India and had recently put in place the top management for operations. Earlier, Allianz had asked for RBIs permission to start Dresdner operation in India under its own brand name, but RBI had rejected it. Now the future of Dresdners India operations is not very clear, especially after it is being taken over by Commerzbank AG.

Taking over Dresdner, which analysts estimate to be worth about $13 billion, will create a group to rival flagship lender Deutsche Bank AG and change the face of banking in Europes biggest economy.

The idea is for Commerzbank to take an initial 51% stake in Dresdner and buy the rest later, the source said, giving Commerzbank a badly needed leg up in its home market which is dominated by state-owned not-for-profit lenders. Despite being one of the countrys biggest lenders, Commerzbank is still a lightweight by European standards, with a market value of about $19.13 billionless than half that of Frankfurt neighbour Deutsche Bank.