Plans by German insurance giant Allianz to cut 7,500 jobs have been met with strike threats from German unions.
Allianz announced yesterday that it was cutting 4 per cent of its workforce and restructuring its operations to cut costs by €500 million, boost earnings and win back market share.
But Germany's services union Verdi attacked the plan, the largest restructuring in the company's 115-year history, pointing out that the company had posted record profits of €4.5 billion.
"The announced measures are unfortunately absolutely necessary. We have continually lost customers and market share in Germany in the last years," said chief executive Michael Diekmann in Munich yesterday, admitting that it was "highly unpopular" in Germany to announce job cuts at profitable companies.
"The path we are starting down today is the basis for future profitable growth of our businesses in Germany. Today we can do this from a position of strength. But whoever puts necessary measures on the long finger comes ever stronger pressure later and then has to take even more drastic measures."
About 5,000 jobs will be cut by abolishing parallel structures in Allianz's core insurance companies and the company will halve to 10 the number of German cities in which it has administrative operations. No job losses are expected in Allianz's Irish operations, though some back-office banking jobs will go in Britain.
Another 2,480 jobs are to be cut at the Dresdner Bank subsidiary in Germany, with an additional 500 job cuts in Dresdner's foreign subsidiaries. The cuts will hit hard at Dresdner, where management have cut over 18,000 full-time jobs in the last six years.
The bank has come under pressure because of low profitability since it was taken over by Allianz in 2001: while market leader Deutsche Bank generates a 16 per cent yield, Dresdner offers just a 9 per cent yield, falling to 5 per cent when special one-off factors are excluded.
Dresdner chief executive Herbert Walter said the company would "try to exclude redundancies but there is no guarantee".
Dresdner Bank's investment banking arm business, Dresdner Kleinwort Wasserstein, is to drop Wasserstein from its name and concentrate on global banking and a capital markets arm.
Allianz workers in Munich yesterday were depressed and annoyed at the news. "There is no need for this, it's not like we have to rescue the firm, this is simply for shareholders," said one.
Shares in Allianz rose 1.7 per cent at news of the restructuring.
Officials at the Verdi union said it was preparing short-term action and warning strikes, and could not rule out longer strikes.
"For us this is not acceptable," said Oliver Ostmann, secretary of Verdi's insurance branch. "We cannot accept that jobs are being cut with €4.5 billion profit."
Allianz is the third insurer to announce job cuts in the past two weeks after Royal & Sun Alliance and Axa. Allianz has agreed it will not make any compulsory redundancies until 2008.
