Commerzbank to buy Dresdner and axe 9,000 jobs

By John O'Donnell and Patricia Uhlig

FRANKFURT (Reuters) - Commerzbank (CBKG.DE) agreed to buy Dresdner Bank from Allianz (ALVG.DE) on Sunday in a $14.5 billion (8 billion pounds) all-German deal that will break the country's banking mould and cost 9,000 jobs.

Commerzbank (CBKG.DE) will buy its competitor in two steps, taking 60 percent this year and the rest in 2009 to create a rival to sector leader Deutsche Bank (DBKGn.DE) in Europe's biggest economy.

Much of the purchase price will be paid to Allianz in the form of shares, leaving Europe's biggest insurer with a stake of almost 30 percent in the new Commerzbank.

The new owner plans to close more than a third of the combined group's 1,900 branches and pare back laggard investment bank Dresdner Kleinwort, which has been further hobbled by the credit crunch.

The deal puts a price tag of 9.8 billion euros on Dresdner. Allianz, Europe's biggest insurer, paid 24 billion for it in 2001.

A further strand to the deal sees Allianz buying Commerzbank's fund management business Cominvest.

Analysts and insiders were sceptical over whether the pairing of what many see as two mediocre performers could create a financial champion.

"It is good for Allianz. In the seven years they have owned Dresdner they have learned that they don't have a clue about running a bank," said Dirk Becker, an analyst with Landsbanki Kepler.