German bank may cut 3,000 jobs

FRANKFURT, Aug 1 (Reuters) -- Dresdner Bank Chief Executive Bernd Fahrholz spelled out the consequences of the bank's disastrous second quarter on Thursday, saying 3,000 jobs could go on top of thousands already shed in recent months.

Dresdner's parent, insurance group Allianz AG, made a shock profit warning on Wednesday, dropping its full year profit target and announcing a second quarter loss of 350 million euros ($342 million) after heavy losses at its banking unit.

But Fahrholz said the bank would not alter its business model and was not putting its investment banking business, Dresdner Kleinwort Wasserstein (DrKW), on the block contrary to what many analysts had expected.

Dresdner, which has already announced 8,000 job cuts between 2000 and 2003, will focus its savings drive on the corporates and markets division, which contains Dresdner's loan business as well as DrKW.

"The measures can cost up to 3,000 jobs,'' Fahrholz told reporters.

Allianz shares, which lost over 11 percent on Wednesday, slid 1.58 percent by 0849 GMT, underperforming the blue chip DAX index which was 2.7 percent higher and European sector peers.

The Munich-based financial services giant said on Wednesday its banking segment was especially hard-hit by a number of major insolvencies and the continuing crisis in Latin America.

It said Dresdner Bank's credit business would be split off into a separate unit managed as an independent cost centre to free up to three billion euros in risk capital, which would be redeployed in other parts of the Allianz group.

Allianz also plans to cut Dresdner's corporate centre significantly, combining the service functions of its Private and Corporate Customers and Corporates and Markets divisions and transferring some functions to Allianz's own group centre.

Dresdner was one of the main creditors in a string of some of Germany's most spectacular recent insolvencies including the Kirch media group and builder Philipp Holzmann, both of which collapsed under billions of euros in debt earlier this year, and engineering firm Babcock Borsig.