Allianz slashes 7,480 jobs in insurance and banking

Allianz AG, the world's largest financial services providers, said Thursday it will slash 7,480 jobs at its domestic insurance and banking operations as part of the restructuring it began last year.

Europe’s largest insurer by premium income will drop the Wasserstein name from its London-based investment bank, now to be known as Dresdner Kleinwort.

The Munich, Germany based company said it will axe 5,000 jobs in the domestic insurance branch and 2,480 at Dresdner Bank by the end of 2008. The German insurance work force encompasses 40,000, while Dresdner Bank has 34,000 employees. The company employs nearly 178,000 people, globally.

Allianz acquired Dresdner in 2001 for roughly $ 24 billion and since then has slashed 17,000 jobs at the company, which operates more than 960 branches in Germany, and performs retail and private banking, asset management and lending.

The company stated it also plans to decrease the number of its administrative insurance centers in Germany from 21 to 10.

Justifying the move, Allianz Chief Executive Michael Diekmann said, “What we are initiating now will lay the foundation for our companies' future profitable growth in Germany.”

"Today, we are able to do this from a position of strength. Anyone who puts off essential decisions until some distant point in time will find themselves coming under far greater pressure in the future and will then be forced to take far more drastic steps," Diekmann added.

Allianz said it planned no further cuts in the coming months.

The cuts could cost up to € 1 billion (£ 688 million), a substantial part of it in severance payments, which will hit Allianz profits this year. German insurance jobs are to be cut back by 15% and at the bank by around 7%.

Allianz said it anticipates the job cuts at its insurance unit, which will come through repentance, to reduce costs by as much as 600 million euros ($ 758 million), while the changes in Dresdner would hopefully result in savings and increased revenue of some 600 million euros in 2008.

Shares of Allianz were straightened at 119.62 euros (US $ 151.10) Thursday, while shares of Dresdner sank about half a percent to 115.35 euros ($ 145.71) in Frankfurt trading.