Dresdner losses weigh as Allianz breaks up bank

By Jonathan Gould

FRANKFURT (Reuters) - Fresh writedowns approaching 1 billion euros (793.3 million pounds) kept Germany's Dresdner Bank firmly in the red in the first quarter, adding to pressure on parent Allianz (ALVG.DE: Quote, Profile, Research) to cut its losses and break it up.

Dresdner posted a quarterly operating loss of 453 million euros, about the same level as in the fourth quarter, and Allianz said it was not possible to give a meaningful forecast for earnings at the bank due to financial market uncertainty.

"We do not expect that the years 2008 and 2009 will make up for the shortfall in 2007," Europe's biggest insurance group said of its banking arm.

In addition to 845 million euros of writedowns on structured investments, Dresdner also took hits of 95 million from its exposure to monoline insurers and 19 million to take its K2 structured investment vehicle fully onto its balance sheet.

Allianz plans to split Dresdner into a retail bank and an investment bank, Dresdner Kleinwort, a move which it says would help it play an active role in industry consolidation.

Allianz aims to complete the split by the end of August, with the focus on the simpler task of carving out the retail bank from the rest, Allianz finance chief Helmut Perlet told journalists in a conference call.

There is no timetable for what to do with investment bank Dresdner Kleinwort, Perlet said.

Speculation that the Dresdner parts could be sold or merged has periodically boosted Allianz's share price.