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Allianz and Dresdner Bank

Acquisition
Submitted ByPreeti Garg
Nirmal Agrawal

Overview - Allianz AG

1890
Founded in Berlin
Immediately perused
business outside
countrys borders
By 1913, 20% of
premium income
from outside
Germany

1920 (Post First world war)


1950-1980
Allianz had to
withdraw its activities The second world war 1990
from international
scene and its
activities remained
limited until second
world war
Domestically, it took
part in the wave of
bank mergers in 1920

caused significant
losses and all its
assets were seized
Allianz repurchased
its confiscated assets
in 1950
Became Europes
largest insurer
through series of
acquisitions in 1970s
and 1980s.

Allianz gained control


of Deutsche AG, East
Germanys insurance
monopoly
Expanded in Japan
and Mexico, set up
asset management
arm in Hong Kong
and bought French
insurer AGF

Shareholding pattern of Allianz AG


Allianz was part of web of cross ownership between banks, insurers and
large corporations.
This system of interlocking ownership was often referred to as
Deutschland AG.
Motive-Stable market economy
-Defend against hostile takeover

Allianz core line of business

P&C

Property &
casualty
insurance

Provision

Performan
ce

Life and
Health
insurance

Asset
Manageme
nt and
Financial
services

group
had
market
capitalization of 98 billion
euros and a total premium
income
came
from
insurance of 68 billion
euros.
Regarded as one of the top
3 insurers in the world.
Offered insurance products
to
retail
as
well
as
corporate segments.
In Germany, Allianz had
17.8
million
customers
divided among private,
corporate and industrial
clients.
Sold
products
through
12000 tied agents and
3600
customer
service
representatives
through
cooperation
agreements

Allianz Balance Sheet

Allianz Income Statement

Allianz Income Statement

Allianz Banks financials:


Net income of 2.4 bn in year 2000
80% of group premium income from Europe
55% of income came from P&C
713.3 billion of AUM
Acquired PIMCO in 2000 and Nicholas Applegate

German Insurance industry:


Riester reforms to kick in from 2002
Impact of globalization

Overview Dresdner Bank

Germanys third largest private commercial bank


Assets of 483.5 bn euros
Net income: 1.7 billion euros (FY 2000)
More than 50000 employees; 1300 branches
Merged with U.S. investment bank Wasserstein Persella

Inves
tmen
t
Bank

Real
Estate

Private
Clients

Corporate
Clients

Dres
dner
Bank

Asset
Management

Trans
actio
n
Bank
ing

Dresdner Financials

Dresdner Financials

German Banking Sector


Historically, banks across the world were labelled by their primary
functions :
Commercial Banks
Saving and loan association
Investment banks
Allfinaz Banks provide financial and consulting services for all
financial needs of their clients.
Bancassurance concept of fusing insurance business with a strong
bank
German retail banking sector was overcrowded with poor profitability.
Intricate cross holdings and tax on selling corporate holdings slowed
consolidation between banks.
Public
Mittlestand independent, unlisted
credit
medium sized family owned
institution
business.
s
Private
Commerci
al Banks

Germa
n
Banki
ng
Sector

Credit
cooperativ
es

Relied heavily on flexible credit by


the regional state banks. This notion
was known as Hausbank meaning
from cradle to grave
Contradictory to Anglo American

Strategic Rationale for Allianz to acquire Dresdner bank


Upcoming reforms to state pension system
Riester reforms shift the burden of pension from state to
individual and company based retirement plans
create opportunity for pensions and asset management products
50% capital gains tax on corporate disposal of shareholdings in other
companies would be scrapped

Distribution and Sales

SWOT Analysis

Individual Business Segment Synergies

So did the merger take place??

Deal details
Allianz bought Dresdner Bank for 24 bn
As part of the transaction, Allianz agreed to
sell its 13.5 per cent stake in
HypoVereinsbank to Munich Re, and to acquire
Munich Re's 40 per cent stake in Allianz Leben
Following completion of the acquisition, Allianz
and Dresdner Bank combined their asset
management activities by forming Allianz
Global Investors.
Do you think they lived happily thereafter ??

This marriage is considered to be the


worst in the history of banking.
Reasons : 35.5 bn of bad debts
: Dresdner Banks exposure
to Americas
: Fall in stock-markets led
to writing
down of portfolio by its
investment bank
Aftermath :
Allianz sold Dresdner Bank for 8.8 bn to Commerzbank in 2008.

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