Job cuts at Germany's banks suggests their bid to become global financial players has failed
The ad could read something like this: 'Investment bank for sale. Collection of prestigious names attached. Some wear and tear. All offers considered.''
Michael Diekmann, chief executive-designate of Allianz, Europe's largest insurer, has not placed it yet. It is a fair guess, though, he is working on the wording. If it is not already on the market, Allianz's investment bank unit, Dresdner Kleinwort Wasserstein, may soon be.
'The aim is to make some of Dresdner's businesses interesting for partnerships and joint ventures, and I am referring in particular to the investment bank,'' Diekmann said.
The press conference Allianz held recently was not a happy one. The company reported its first annual loss since World War II. It announced it was raising 5bn euros by selling shares and bonds to boost capital.
The announcement of Dresdner Kleinwort Wasserstein's sale, if and when it comes, will not be a happy occasion.
It will put an end to Allianz's ambitions to expand into global banking. It will mark another milestone in the German retreat from global finance.
Commerzbank, Germany's fourth-largest lender, this month said it plans 2,800 job cuts and is trimming bonuses for its investment bankers. It is firing half its staff in Japan, while shutting its foreign currency business in that country.
In total, it has pruned about a fifth of its workforce since it started cutting back in October 2001.
WestLB, Germany's sixth-largest bank, said recently it plans to eliminate more than 100 jobs in its London office, or about a third of its workforce there. WestLB's investment-banking and equity capital market heads have both left.
Of the big German financial firms, only Deutsche Bank remains a serious candidate to compete against Wall Street rivals such as Goldman Sachs Group, Morgan Stanley and Citigroup's investment-banking unit Salomon Smith Barney. With the withdrawal of most German banks from international finance businesses including advising on mergers and acquisitions and selling new shares, the field looks set to become an exclusive US-Swiss preserve. The strategy of the German banks was sound enough. Solid, dependable profits from their German base would subsidise foreign initiatives.
But expensive acquisitions, such as Dresdner's purchases of Kleinwort Benson Group and Wasserstein, Perella & Co at $1.6bn apiece, did not work out as planned after M&A guru Bruce Wasserstein jumped ship.
Deutsche's acquisitions of Morgan Grenfell and Bankers Trust Corp. in 1999 have worked out better, but earnings from corporate banking and securities still dropped to 224m euros in 2002, compared with 1.6bn euros a year earlier, and it has yet to move into the top tier of investment-banking businesses.
Even if Deutsche can gain ground against its US and Swiss rivals, it will be a long time before any other German bank joins it.
Bloomberg newsroom, London
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