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Brave new dawn at Dresdner Kleinwort?

Bankers at Dresdner Kleinwort have reason to feel radiant: they might not be horribly massacred in a merger with a rival after all.

The bearer of the good news is an article which appeared in this week’s Financial News.

According to said tract, Allianz (which owns Dresdner K) now plans to spin off its commercial and retail banking arm rather than Dresdner Kleinwort, leaving Dresdner K’s investment bankers sitting pretty.

“Once the retail business is spun off, a standalone investment bank will remain, but with the ratings, balance sheet and capital guarantees of Dresdner Bank,” the paper said.

Bankers at Dresdner Kleinwort appear excited at the prospect. “Most people see this as a positive thing,” says one. “It would allow us a lot more flexibility – we could forge a stronger relationship with Allianz, or Allianz could bring in a strong counterparty [AKA a Chinese or Russian bank/sovereign wealth fund] to be a part owner of Dresdner Kleinwort.”

Simon Maughan, an analyst at MF Global, and former Dresdner K employee, says it’s particularly good news bearing in mind the alternative. “For umpteen years it’s always been the investment bank that would be sold off and purchased by a rival, upon which all the staff would be scorched.”

Financial News points out another advantage of spinning off Dresdner’s commercial and retail division – the investment bank would be free of the costs associated with it.

The Dresdner banker confirms this has been a source of angst: “We have huge overheads in Germany and we can’t do anything about them because of German labour laws.”

But while profits should rise and Dresdner Kleinwort bankers may be more secure in their jobs if the commercial bank goes its own way, bonuses won’t necessarily be any bigger. “Dresdner Kleinwort has always made significantly less than the minimum return expected by Allianz,” says Maughan. “It owes Allianz, so don’t expect a massive bonanza in bonuses just because profits increase.”

Comments (7)

  1. Dresdner is a bank that has been maligned for too long. With the power of Allianz behind it it will go far, especially in Germany. Go DK!

    The teutonic warrior Reply
  2. (desperately searching through rolodex) ” where is it , I’m sure I didn’t throw it away!!??”….. Tania darling be a love and find out the name for that recruitment manager round at DK
    ” What are we moving into the rag trade Roger?”

    Desperate headhunter Reply
  3. DK has been, is, and always will be a thorn in the side of Allianz. Allianz is in the unenviable position of trying to sell an investment bank which no bank on the planet has and never will have the slightest interest in buying.

  4. Never ever will Allianz sell the private + retail banking and keep the IB divisions. Or do you think, Daimler would sell its automobile plants to free money for the financial division?

  5. All i can say about the subpar profits generated at DK is that having interviewed for one of their FICC desks, its clear that part of the cause is the neanderthalls that call themselves traders. They evidently seem to favour braun over brains when it comes to recruitment. Traders that act on instinct alone vs those that incorporate academics and diversity (displayed at more successful banks such as Goldman Sachs) shows that DK is and always will be at an inherent disadvantage relative to its peers, until it hires traders that can ride the waves of the market rather than chase them.

    I agree with comments above.. DK is and will continue to be a thorn for Allianz. The sad fact is they are not a force to be recognised (let alone reckoned with) in Europe.. let alone on a global scale.

  6. DK is probably one of the most mediocre institutions in the City. Frankly, it makes the National Bank of Egypt look like Goldman Sachs by comparison.

  7. DK has been wallowing in comfortable mediocrity for years. Always a follower, never a mover and shaker, i agree with the comment above that it employs some of the worst drones in the industry.

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