Not so long ago, staff at Dresdner Klein-wort, the investment-banking arm of Dresdner, a German bank, used to refer to Commerzbank, a rival, as "Comedy bank". No one is laughing now. On August 31st Al-lianz, an insurer, gave up the struggle to make anything of its 2001 purchase of Dresdner and sold the bank to Commerzbank for (C)9.8 billion ($14.2 billion). The new entity will concentrate on its German retail and business customers. Investment-banking will shrink, with the axe expected to fall hardest in London.rnThe initial reaction of shareholders was unenthusiastic: shares in Commerzbankrnfell by more than 11% the day after the deal was announced whereas those in Allianz, which will eventually end up with a 30% stake in the enlarged bank, edged up marginally. Among other things, investors fretted that Commerzbank was paying too much for Dresdner; that the deal increased its exposure to toxic assets; and that shrinking the investment bank could be costly in a falling market.
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