Allianz paved the way for a round of German banking consolidation today as the owner of Dresdner Bank said it was actively involved in merger talks with unnamed parties in the country.

Michael Diekmann, the chief executive, told shareholders at Allianz's annual meeting that a meaningful series of mergers and acquisitions was realistic.

"There are currently talks, but they have not yet reached a stage at which I can talk about them," Mr Diekman told the meeting.

The boss of Europe's largest insurance group, which also owns Dresdner Kleinwort, the investment bank, refused to be drawn on the nature of Allianz's discussions.

He would only say Germany's private banks need to increase their market share to remain competitive.

It is not clear whether Allianz is planning to use Dresdner Bank to take control of a German private or state bank, or if it harbours hopes of selling its banking arm.

Analysts have long argued that Allianz overpaid for Dresdner and has failed to make its ownership of the German asset pay.

The country's state-backed Landesbanks, in need of funding in the wake of the removal of state guarantees, are also regarded as ripe for consolidation.

Dresdner Kleinwort has suffered persistent speculation about its future. In the past Allianz has explored several options for the division, including a buyout, sale or spin-off.

Earlier this year, Allianz revealed plans to split Dresdner in two divisions: private and corporate clients, and investment banking. It said this move would be completed by the end of August.

Mr Diekmann said the bank now aimed to complete the split by year-end.

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