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Commerzbank in dive as Dresdner jobs axe swings
Gideon Spanier, Evening Standard1 Sep 2008
Shares in German banking giant Commerzbank fell more than 8% today as investors fretted about its £7.3 billion takeover of fellow German bank Dresdner Kleinwort.
As many as 1200 jobs are set to be axed in London, the HQ of Dresdner Kleinwort's investment banking arm, as part of a global plan to lose 9000 posts in the merged company.
The two banks currently employ about 67,000. Senior mergers and acquisitions bankers, traders and IT staff will be hardest hit with Commerzbank planning to wind down Dresdner's proprietary trading operations, slash back its equities business and scale down the bank's more "speculative" business links.
Recruitment experts are warning of 20,000 job losses in the City because of the credit crunch this year.
Martin Blessing, chief executive of Commerzbank, said today the 136-year-old Dresdner brand will be dropped as the investment banking arm, which has been losing money for four consecutive quarters, is integrated into Commerzbank. Sources said the IB division would be "right-sized".
But the name of Dresdner's sister company, London-based private bank Kleinwort Benson, one of the oldest names in the City, is likely to remain when it is sold to Commerzbank.
Robert Taylor, chief executive of Kleinwort Benson, told the Evening Standard: "We haven't been told that we are going to lose the name." Taylor added that he did not expect to have to slash jobs at his wealth-management business as Commerzbank's own operations are much smaller: "Private wealth is a core part of the Commerzbank strategy and we are part of a different repor ting line from the investment bank. Commerzbank do have a private bank but by acquiring the Dresdner private bank side, it will be increasing its size by about four and a half times."
Kleinwort Benson is ranked in the top 10 private banks in the UK while Commerzbank is seen as being around 14th among European private banks. Kleinwort Benson's clients are chiefly in Britain, Africa and Asia. Most of Commerzbank's wealth-management customers are thought to be in Germany.
