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German bank chief quits
FRANKFURT, Germany (Reuters) -- Allianz AG braced for a dramatic overhaul of its ailing Dresdner Bank division on Wednesday, a day after a top-level management shake-up in which Dresdner's chief was replaced by a rival from Deutsche Bank AG. Allianz confirmed a Reuters report from Tuesday, saying Dresdner head Bernd Fahrholz, 55, had resigned and would be replaced by the chief of Deutsche Bank's retail banking division Herbert Walter, 49, with immediate effect. Fahrholz's long-awaited exit, and his surprise replacement by Walter, has intensified speculation that Allianz is preparing to shift its focus further away from investment banking and towards Dresdner's expansive retail chain. That could mean dramatic measures including job cuts on top of 11,000 already carried out at Dresdner, an attempt to sell operations in the integrated Corporates and Markets division and other efforts to streamline the ailing bank, analysts said. Allianz shares were up 4.4 percent at 66.79 euros by 1123 GMT, outperforming a higher European insurance sector. "I could imagine that investment and corporate banking could be shed and that all options are open for them,'' said WestLB Panmure insurance analyst Carsten Zielke. "It shouldn't be considered any longer as a core business and will likely now be judged on its own merits.'' Zielke said he expected Dresdner to focus more on its retail business and the sale of its insurance products. The bank's corporate and investment banking business, of which investment bank Dresdner Kleinwort Wasserstein is a key part, has been the main source of losses at Dresdner, which posted a pre-tax loss of 972 million euros in the third quarter of 2002 alone. Deutsche blowFahrholz's departure is the second by a top executive in the wake of the controversial 2001 Allianz-Dresdner merger. Henning Schulte-Noelle, Allianz's chief executive until the end of April, fell on his sword in December, naming board member Michael Diekmann as his successor. The move comes as a blow to Deutsche, which has often showcased Walter's accomplishments at its retail unit. Senior managers at Deutsche told Reuters that Walter's departure would not trigger a strategic review of its retail operations. Nor do analysts expect intense rivals Allianz or Deutsche to become more open to creative solutions that could include a merger of their retail operations. Insurer Allianz has struggled to turn around loss-making Dresdner since it bought the bank, at that time Germany's third-largest, for 24 billion euros ($25.5 billion) in 2001. Details of the group's plans for the bank, and the depth of its 2002 losses, are expected at Allianz's annual results conference on Thursday. Deutsche confirmed cost-cutting expert Walter would leave the bank. He will be replaced by his former deputy, 38-year-old Rainer Neske, the bank said. Fahrholz leaves Dresdner under a cloud after losing a two-year struggle to make the troubled bank profitable. A Reuters poll of 17 analysts shows Allianz is expected to post a 2002 net loss of around 1.39 billion euros, which would be its first ever annual loss. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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