Dresdner to merge two key units

FRANKFURT — Dresdner Bank said Thursday that it was merging its corporate lending business with the investment banking division, Dresdner Kleinwort Wasserstein, which was once seen as a prime candidate for a sale.

The nonexecutive supervisory board of Dresdner, a unit of Allianz,approved the changes Thursday, ending any real chance of Dresdner Kleinwort being sold off or floated on the stock exchange, both options that Allianz had considered.

Herbert Walter, chief of the bank, also announced a change of management at the investment bank, which has consistently trailed its peers, and left the door open to job cuts.

The former investment banking chief of the Bavarian lender HVB Group, Stefan Jentzsch, will lead the new combined business, while Andrew Pisker, former chief of Dresdner Kleinwort, will leave.

Pisker, a Briton, has run the Dresdner Kleinwort securities unit since October 2002. The firm will be merged with corporate banking under Jentzsch, who quit as head of investment banking at HVB Group this month. Jentzsch will be a member of Dresdner's management board.

"Pisker quit on his own decision, not on ours," Walter said.He said the bank has not decided whether to keep the Dresdner Kleinwort Wasserstein brand.

Pisker, who joined Dresdner Kleinwort in 2000 from BNP Paribas to oversee the debt division, has been shuffling management to improve profitability.

Allianz, the largest European insurer, acquired the securities business through its $21 billion takeover of Dresdner Bank in 2001 and separated it soon afterward, saying it could only guarantee the investment bank's place in the group until mid 2005.

In early 2004 Allianz had capped the amount of money that it said it would put in the business but later said it might invest more money after all.

Dresdner is combining investment banking with corporate banking to help reach a profitability target of a 12 percent return on equity by 2008, the company said.

After shedding almost a third of its work force and selling billions of euros in bad debt, Dresdner may earn its cost of capital this year for the first time since 2000, said Helmut Perlet, the chief financial officer of Allianz, on Nov. 11.

"There is still some room for further efficiency gains," Perlet said then. "We also need to work on productivity and revenue per customer."

Dresdner Bank's net income fell 5.8 percent to €113 million, or $133 million, in the third quarter, missing the €285 million median estimate of 15 analysts surveyed by Bloomberg News.Revenue was unchanged at €1.47 billion.

Dresdner Kleinwort's third-quarter profit fell about 50 percent from a year earlier as an increase in tax costs outweighed a 29 percent gain in revenue. The unit's revenue growth lagged behind all of its major competitors in the first half.