Allianz Demands Job Cuts at Dresdner Bank

Under renewed pressure to clean up loss-making Dresdner Bank, Allianz announced on Thursday that it aimed to cut 3,000 jobs at the troublesome bank by the middle of next year.

The job cuts are part of the Munich insurer’s Turnaround 2003 strategy that will bring the bank they paid 24 billion euro for just 14 months ago back into the black and attractive on the stock market. Dresdner Bank announced losses of 1 billion euro last quarter, 800 million euro of it in its coporate banking sector.

The losses contributed to a 350 million euro loss by Allianz in the second quarter and pushed the insurer to apply renewed pressure on Dresdner. Already, the bank has announced 8,000 job cuts. The subsidiary investment bank Dresdner Kleinwort Wasserstein will most likely be the target of a new wave of 3,000 job cuts – with around 1,200 investment bankers set to lose their jobs by the middle of next year.

First among them was investment bank head Leonhard Fischer, who resigned Thursday over “differences of opinion” with Dresdner Bank’s head on the how reform-oriented the bank should be.

Fischer, who had lifted Kleinwort Wasserstein's fate upon his shoulders, had proposed severe job cuts but ran up against opposition among the unions and regional bank representatives.

No relief in sight

The successor to the investment banker, chairman of the board Bernd Fahrholz, is likely to be under as much pressure to resucitate the bank's Corporates & Markets sector, which reported an 800 million euro loss last quarter.

“Our first goal is, as soon as next year, become profitable and get an operating profit,” Fahrholz told journalists on Thursday.

The statements were made with an eye of improving Allianz sinking stock in the Frankfurt exchange. The stock dropped almost 4 percent to 99 euro in trading on Thursday.

The bank and giant insurer merged last August to create one of the world's largest financial services companies. The company has 23 million customers in Germany alone, and a stock market value of 102 billion euro.

But from the very beginning, Allianz management had been eager to renovate Dresdner Bank. The new plan aims to cut 700 million euro by the middle of 2003, and reduce adminsitrative costs by more than 2 billion euro.