German savings banks want closer ties among insurers-sources
* Savings banks eye options for insurers -sources
* High-level working group to meet in January -sources
* Two public sector insurers discussing merger
* Allianz overture to Provinzial seen as trigger
FRANKFURT, Dec 21 (Reuters) - Germany's savings banks are pushing for tighter cooperation among the public sector insurers they largely own, following an overture by Allianz to buy into the sector, two people familiar with savings bank thinking said.
The sources said Georg Fahrenschon, head of the DSGV national savings bank association, is one of the drivers in the effort to forge closer ties among the insurers, who together control 10 percent of the country's insurance market and earn 18 billion euros ($24 billion) in premiums every year.
A high level working group is due to meet in Berlin in January to explore options, the sources told Reuters.
The sector is already seeing some movement in this direction, with insurer Provinzial Nordwest due to hold exclusive talks with peer Provinzial Rheinland until March 31, although earlier merger efforts failed.
Germany's public sector banks and insurers have a special status under German law and traditionally have closed ranks to ward off any threat of influence from the private sector.
However, that special status appeared under threat after Allianz made an approach to Provinzial Nordwest, with financial sources saying the country's market leader could be prepared to pay more than 2.25 billion euros for its public sector rival.
That valuation could be enticing to savings bank owners wanting to cut costs in the face of pressure on margins.
Talk of an Allianz bid aroused opposition from services trade union Verdi, which said 6,000 jobs could be at stake.
The sources familiar with savings bank thinking said options to be explored included merging whole companies but also getting individual business units to work together more closely in areas such as IT services.
The options are open but one of the sources warned that prospects for merging whole companies would prove difficult due to their complex ownership structure.
"However, in the long term the companies have to hold their own against the competition and that is becoming increasingly difficult if the association remains a loose one," one of the sources said.
The DSGV declined to comment.
More than 90 percent of the premiums among public sector insurers are earned by the top five players, with Bavaria's Versicherungskammer Bayern in the lead.
Consolidation among the insurers could save around 500 million euros per year, the sources said, adding that the savings banks hoped to take rapid decisions on the main issues.
"Provinzial has been a trigger when it comes to the insurers; sometimes you need that to get things rolling," the second source said.
Success in bringing insurers together may prompt savings banks to try a similar move with their home loan banks, where cooperation also has been poor, the source added. ($1 = 0.7555 euros) (Reporting by Arno Schuetze and Philipp Halstrick; Writing by Jonathan Gould; Editing by Hans-Juergen Peters)
- Malaysia air probe finds scant evidence of attack: sources |
- Search widened as Malaysia air probe finds scant evidence of attack |
- Exclusive: Chinese raw materials also found on U.S. B-1 bomber, F-16 jets
- Confrontation in Ukraine as diplomacy stalls |
- Freescale loss in Malaysia tragedy leads to travel policy questions