Allianz's problem with committing

13 July 2004 By Chris Hughes

The German insurer keeps on offering reassurance that it won t pull the plug on either the investment bank or its parent Dresdner. But only if they earn their cost of capital. Fresh investment is another matter altogether. It s hardly a message to boost morale.

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Allianz, the German insurer, said it would not divest Dresdner Kleinwort Wasserstein so long as the investment banking subsidiary is profitable and maintains its lowrisk profile.

"As long as the bank earns its cost of capital and is prepared to keep within the risk parameters we have set, we are happy," the company told the Financial Times. "If it wants to go beyond that, it may need external capital. Then, it will be up to the executive committee of DKW to come to us."

Last month Michael Diekmann, Allianz's executive, hinted at a possible sale of Dresdner, DKW's parent company, if it did not meet its profitability targets.

Allianz has previously said it would back DrKW until August 2005.

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