MORE THAN 1,000 jobs in London are to be axed at the investment bank Dresdner Kleinwort as part of a €9 billion (£7.3 billion) takeover deal expected to be announced later today.

Commerzbank is in the final stages of negotiating the acquisition of Dresdner Bank from the German insurance giant Allianz.

Under the terms of the proposed deal, Dresdner’s investment-banking arm will be substantially reduced, according to sources close to the talks. The bank’s London operations will be especially badly hit, with at least half of the 2,000 staff expected to lose their jobs.

Commerzbank is planning to wind down Dresdner Kleinwort’s proprietary trading operations, radically reduce its equities business and scale back all the bank’s more “speculative” business lines.

The bank’s highly rated equity-research function is also expecting huge cuts, particularly in the UK.

The slimmed-down Dresdner Kleinwort will be merged into Commerzbank’s investment-banking operation, which is primarily focused on Germany and handles foreign transactions for German clients. The Dresdner senior management are all thought to be leaving as a result of the deal, which is expected to lead to about 9,000 job cuts across the group.

The enlarged bank will be headed by Klaus-Peter Müller, chairman of the Commerzbank supervisory board.

China Development Bank has also been in talks with Allianz about a Dresdner deal. Although the state-owned bank is believed to have offered as much as €11 billion, it is understood that the payment would have been made in three instalments.

There has also been political pressure for an all-German solution, in spite of the inevitable job cuts.

Talks between Commerzbank and Allianz were continuing last night. One potential stumbling block is Commerzbank’s insistence on receiving some form of protection against further credit write-downs at Dresdner. The so-called “risk shelter” is said to be worth about €1 billion.

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