Commerz-Dresdner deal 'soon'

Agreement on a merger between Germany's Commerzbank and Dresdner Bank could possibly be reached by the end of this month, said a source.

Commerzbank was making arrangements for the possibility of a merger, the person said yesterday.

German weekly Welt am Sonntag reported in a preview of a report due to be published that an agreement between Commerzbank and insurer Allianz about buying its Dresdner Bank was possible within the coming week.

The paper quoted sources as saying that the two companies had agreed on the basic principles of the transaction.

According to the report, Commerzbank would buy Dresdner for slightly more than 9 billion euros ($13.38 bn) and Allianz would vouch for write-downs on the balance sheet of Dresdner of up to 1bn euros.

The sums were still being negotiated.

Allianz would have a stake of slightly less than 30 per cent in the merged bank, the report also said.

Commerzbank has been in talks with insurer Allianz about buying its Dresdner Bank since June but there have been few public signs of life in the negotiations in recent weeks. On Friday, however, a source said Commerzbank planned to call a supervisory board meeting late next week to discuss a merger with Dresdner Bank.

The 21-strong supervisory board is Commerzbank's governing body and its approval is required for large deals such as a merger with Dresdner.

The company's shareholders hope a sale will end an unhappy marriage.

Parent Allianz was once seen as an unshakeable financial powerhouse but is now licking its wounds largely thanks to Dresdner.


The numbers

$13bn: Amount Commerzbank would reportedly pay to buy Dresdner

30%: Stake Allianz is expected to have stake in the merged bank

21: Supervisory board members of Commerzbank are required to approve the deal