Allianz and Dresdner Bank will bundle their forces and in future focus on the three core areas, insurance, asset management and banking.

Allianz-Dresdner joint statement

Analysts expected Allianz to integrate Dresdner into the group with a high degree of autonomy and with no layoffs or no significant cost savings.

"Allianz and Dresdner Bank will bundle their forces and in future focus on the three core areas, insurance, asset management and banking," the companies said in a statement.

The statement made no mention of cost savings and gave no details of the way Allianz would change its involvement beyond its existing 21.4% stake in Dresdner.

The deal will not result in any job cuts, Dresdner Bank chairman, Bernd Fahrholz, promised on Sunday.

The deal is still subject to approval from each company's shareholders and competition authorities.

Good fit

"It is a smart move from Allianz acquiring Dresdner. This will really change the financial environment in Germany and also in Europe," said Nordinvest fund manager Boris B�hm.

Frankfurt-based Dresdner is expected to retain a higher level of autonomy from Munich-based Allianz

Allianz has some 17m customers in Germany, while Dresdner Bank serves 6.5m via its network of 1,200 high street branches.

A combination of the two creates one of the biggest asset managers in the world, with more than one trillion euros in assets, the partners claimed.

The joint group is expected to retain the name Allianz, its Munich headquarters and begin trading on 1 July.

The German private bank, SchmidtBank, said it no intention of selling its online broker Consors to insurance giant Allianz, contrary to German media speculation that it would form part of the Dresdner deal, SchmidtBank chief Karl Gerhard Schmidt said Sunday.

German shake out

The Allianz takeover of Dresdner will shake out the German financial sector and is expected to create several financial giants likely to compete fiercely at home and abroad for market share.

The deal will unravel the complex of cross-shareholdings of Allianz and some of Germany's biggest financial institutions.

This will really change the financial environment in Germany and also in Europe.

Boris B�hm Nordinvest fund manager

The world's largest reinsurer, Munich Re, will swap its 40% stake in Allianz's principal German life insurance arm, Allianz Leben, for Allianz's 13.3% stake in HypoVereinsbank.

The re-insurer combined with HypoVereinsbank, Germany's second biggest bank, will create a second bancassurance giant.

Germany's largest bank, Deutsche Bank, which has been busy consolidating its retail and investment banking activities, could feel increasingly pressured from its new larger rivals to also strike a deal, while fourth-ranked Commerzbank could become increasingly isolated.

Deutsche's cooperation talks with Allianz, which fuelled speculation until recently that Allianz would turn its back on Dresdner, are now expected to be broken off.