End users are getting set to increase their credit lines with Dresdner Kleinwort Wasserstein once Allianz completes its acquisition of Dresdner Bank. Following the acquisition, credit rating agencies are likely to upgrade Dresdner. An official in the treasury department of Finnish energy company Fortum said the upgrade means the company should be able to increase its credit lines for derivatives products to the German bank by approximately 20%. Marcus Fedder, treasurer at the European Bank for Reconstruction and Development in London, expects to be able to boost its derivatives business with Dresdner as well.
Tarek Mahmoud, managing director and head of derivatives marketing at Dresdner Kleinwort Wasserstein in London, said the higher credit rating and increased size of the new company are the main advantages of the merger for the derivatives business. Pairing up with one of the largest insurance companies and asset managers in the world will help the bank's flow business, he added. DrKW will also look at using Allianz's retail distribution network for products with embedded derivatives. Mahmoud said it was too early to speculate on the types of products these might be.
Dresdner is likely to be upgraded to AA or AA+ depending on how the two companies are integrated after the takeover, said Michael Zlotnik, managing director and analyst covering Dresdner Bank at Standard & Poor's in Frankfurt. Dresdner is currently rated Aa3/AA-.
