When Germany's third-largest bank, Dresdner Bank, disappears from the stock market on Monday it will mark the end of an era in German business. It is the final stage of the #24 billion (£18.9 billion) takeover by insurance giant Allianz first announced last April.
But for German business leaders it is also a watershed: the beginning of the end of the cosy business world known as Germany Inc. More than 96 per cent of Dresdner shareholders voted for the takeover, first announced last April, to create a financial superpower with a market value of #105 billion. The deal makes Allianz the world's fourth-largest asset manager with an asset portfolio worth just short of $1 trillion.
Allianz offered shareholders in Dresdner one Allianz share for every 10 shares they held as well as a cash payment of #200. On Thursday the takeover cleared its last hurdle, receiving approval from European Union Competition Commissioner Mr Mario Monto.
"Our union is above all a very important step toward the dismantling of Germany Inc," said Dresdner chairman Mr Bernd Fahrholz, referring to the halfcentury tradition of Germany's banks and insurance companies having cross-holdings in each other.
The system of overlapping interests, where the companies worked together for the common good, was the driving force behind Germany's post-war economic miracle.
But the system was looking increasingly out of step, particularly in the age of globalisation and consolidation. A decisive push for change came last year in Germany's tax reforms that ended the 50 per cent capital gains tax for corporations, which had led many firms to sit on their investments. With profits from the sale of stakeholdings now tax-free, Allianz chairman Mr Henning Schulte-Noelle announced the Allianz-Dresdner merger, saying it would have a knock-on effect in Germany. The merger would "release new energies that are just waiting for a chance to unfold," he said.
"The end of the capital gains tax is facilitating the restructuring of the financial sector in Germany and the euro zone," said Mr Thomas Mayer, chief economist at Goldman Sachs in Frankfurt.
Taken together, Allianz and Dresdner Bank already reach one in two households in Germany and are worth roughly #100 billion. The deal will give Allianz a new distribution channel for its insurance products and will turn the newly formed group into a leading player in the highly coveted international asset management business. While still far behind Citigroup, the US financial services concern worth about #260 billion, Allianz will be on a par with the Dutch ING group, worth around #70 billion, as well as UBS and Fidelity.
The deal brings to an end a year of farcical bed-hopping for Dresdner Bank. Just over a year ago the bank shook financial markets with the announcement of merger plans with Deutsche Bank. Those plans collapsed and Deutsche Bank Chairman Mr Rolf Breuer sounded more than a little like the jilted lover after news of the Allianz bid last April. He made a vague announcement about how Deutsche could be interested in "some form of partnership" with Allianz and has said nothing on the matter since.
After dropping Deutsche, Dresdner hopped into bed with Commerzback but merger talks suffered a similar fate. With Dresdner within the Allianz fold, the new company will be a one-stop financial services group offering banking and insurance products, well able to stave off all international competition and any danger of a take-over. But analysts will be watching to see if the new entity can retain and build on its customer base, or if the shake-up will mirror previous upheavals in the banking sector elsewhere in Europe.
