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FRANKFURT

Shares up as Allianz nears Dresdner deal

Shares of both insurer Allianz and lender Commerzbank got a boost Monday amid widening reports the latter is about to relieve the former of its cumbersome Dresdner Bank division.

Shares up as Allianz nears Dresdner deal
Photo: DPA

Allianz shares closed 3.1 percent higher while Commerzbank finished the day 4.6 percent up.

Commerzbank and Allianz have been negotiating for months about a possible purchase of Dresdner by Commerzbank and Sunday newspaper reports say a deal may be announced as early as this week.

Allianz is likely to retain 30 percent of Dresdner after an acquisition and Commerzbank plans on also taking on the insurer’s Dresdner Kleinwort investment bank, according to Euro am Sonntag. Significant synergies are possible by firing overlapping, highly paid investment banking positions, according to the paper.

A long overdue consolidation of Germany’s banking landscape has picked up steam this year after France’s Crédit Mutuel Group agreed to buy Citigroup Inc.’s German retail banking activities for €4.9 billion.

German regulations ensure that the country’s crowded banking market offers too few customers to privately owned institutions. Laws prohibit mergers between government, cooperative and private banks and the Germans themselves prefer the appearance of safety offered by state-backed banks.

This has led analysts to call for mergers between private banks to lower per-customer costs and increase profits.

In addition to the Dresdner Bank sale, Deutsche Post is also trying to sell its Deutsche Postbank subsidiary – Germany’s biggest retail bank – most likely to Deutsche Bank while the German government last week agreed to sell its troubled IKB Deutsche Industriebank to Texas financial investor Lone Star Funds.

Munich-based Allianz paid €24 billion for Dresdner seven years ago in hopes of cross selling insurance policies and car loans. But that benefit never developed and Dresdner’s losses forced Allianz to begin shopping the bank – for a reported €8 billion.

Earlier this month Dresdner said it had slipped to an operating loss of €566 million in the second quarter.

That Commerzbank may attempt to swallow Dresdner Kleinwort is unexpected. Some reports suggested Allianz might try to sell it separately since the division’s high-powered investment bankers – fearing for their jobs – scuppered a proposed merger with Deutsche Bank eight years ago.

Neither Commerzbank nor Allianz would comment on the reports.

Allianz shares added €3.27 to close at €107.46 while Commerzbank ended the day at €20.51, €0.90 above Friday’s close.

BANKING

German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.

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