More than 9,000 jobs are to be axed as part of Commerzbank's €9.8 billion (£7.9 billion) takeover of German rival Dresdner Bank, it announced today. The losses are expected to save €1 billion.

Commerzbank, whose shares dropped almost 6.5 per cent to €18.80 in early trading, said that it would achieve a total of €1.9 billion in cost synergies once the transition was complete, including €850 million in the commercial banking business and just over €1 billion in investment banking.

It said that "personnel costs" would provide about half of the cost synergies. About 9,000 job losses are expected from the combined 67,000 labour force, with about 2,500 to be cut outside Germany.

With a large overlap with Commerzbank's existing investment banking business, as many as half of the 2,500 staff at Dresdner Kleinwort, Dresdner's loss-making investment bank, are likely to be laid off. The Kleinwort name, one of oldest banking brands in the City, is expected to be dropped.

De-risking Dresdner Kleinwort and deliberately reducing the bank's revenues will bring a €1.7 billion capital release, Commerzbank said. The new owner is likely to focus on debt and equity derivatives and has little interest in areas such as mergers and acquisitions, proprietary trading and corporate broking.

The bank promised that the job cuts would be conducted with a "socially-responsible approach". "Around 70 per cent of these [job cuts] relate to back office, control and production units, as well as in investment banking," the bank said.

Commerzbank is particularly keen on Dresdner's German retail operation, which will allow it to better compete with the country's state banks. More than a third of the combined group's 1,900 branches will be shut, again to cut costs.

Germany's second-largest bank will pay about €1.6 billion of the purchase price in cash and the remainder in shares, in a transaction that will take place in two stages over the coming year.

A further €975 million for Allianz will be set aside in a trust, to be returned to Commerzbank if more write-offs are required at Dresdner. The bank has so far take a €5 billion hit from the credit crunch.

Because much of the deal is in shares, Allianz will end up holding about 30 per cent of the enlarged Commerzbank.

Allianz will buy Cominvest, Commerzbank’s fund management business, for about €700 million.

The acquisition will create a financial group to rival Deutsche Bank, Germany's biggest bank. Commerzbank is currently about half the size of its Frankfurt counterpart.

It marks an embarrassing loss for Allianz, which paid €24 billion for Dresdner in 2001. The insurer had hoped to sell bank accounts to Allianz customers as well as products such as car insurance at bank branches, but Allianz struggled to control Dresdner's investment banking business, allowing it to rack up huge losses.

Analysts gave warning that the integration of Commerzbank and Dresdner would be difficult. Dirk Becker, analyst at Landsbanki Kepler, said: "It is a huge integration. We will see in half a year that something will go wrong."

There will be restructuring charges of €1.2 billion. Commerzbank expects to hit its targets for efficiency gains by 2012.

Commerzbank also announced a change on its board of managing directors. Bernd Knobloch, who has been on the board since 2006 and runs the bank's Europhypo real estate lending business , will step down at the end of this month. He will be replaced by Stefan Schmittmann.

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