Arcandor sells stake in insurance arm to raise cash

FRANKFURT, Jan 5 (Reuters) - Arcandor (AROG.DE) has sold a stake in its insurance arm to Munich Re's (MUVGn.DE) ERGO (ERGG.DE) as part of a deal that gives the German retail and tourism group full control of its banking unit, it said on Monday.

Munich Re's insurance unit paid a sum in euros in the high double-digit millions to Arcandor for the retailer's 45 percent stake in KarstadtQuelle Versicherungen, an Arcandor spokesman said.

Sources told Reuters in June last year that ERGO would pay Arcandor about 70 million euros ($98 million).

Arcandor and ERGO started to market financial services products together in 2002 via a joint venture, which grouped KarstadtQuelle Bank and KarstadtQuelle Versicherungen, one of Germany's largest direct insurers.

The joint venture will continue but the insurance part now belongs entirely to ERGO and Arcandor has full control over KarstadtQuelle Bank, Germany's largest issuer of Mastercards with a portfolio of 900,000 credit cards, Arcandor said.

"We are confident that the bank can also profit from current dynamic developments in German private customer banking," Arcandor's chief executive, Thomas Middelhoff, said in a statement.

Middelhoff will be succeeded by Deutsche Telekom's (DTEGn.DE) chief financial officer, Karl-Gerhard Eick, on March 1.

Arcandor last month reported a year loss of 746 million euros. It also came under pressure from its banks last year to sell off its stake in profitable travel arm Thomas Cook (TCG.L).

But German private bank Sal. Oppenheim came to the rescue and bought about 29 percent of Arcandor by subscribing for new shares and buying a stake from the Schickedanz family, a major shareholder and heirs to the founder of mail-order firm Quelle.