UK private bank Kleinwort Benson is owned by Dresdner. The press statement issued by Allianz did not say whether this part of the operation will be affected by the transaction or what any impact on staffing would be. Executives were due to hold a conference to brief investors, analysts and the media later today.

The transaction should be completed no later than the end of 2009. It is subject to approval by the regulatory authorities.

"This is a milestone in the consolidation of the German banking sector. With this step we selected the best solution for Dresdner Bank. Together, the two banks will be the German market leader for retail clients and medium-size companies," said Michael Diekmann, chief executive of Allianz.

"As a strong bank, the new company can safeguard jobs in the long term. With a stake of nearly 30 per cent Allianz will be the largest shareholder of the new bank and will gain access to a powerful distribution network for its insurance products. The move will also secure the further success of its bancassurance strategy," Mr Diekmann said.

The acquisition, after several months of talks, combines Germany’s second and third-largest banks to create a clear domestic rival to Deutsche Bank with the largest number of branches.

Allianz said the integration of the two banks will generate efficiency savings and synergies worth the cash equivalent of €5 billion.

The combined banking group will have 11 million private customers in Germany a total of 1,200 branches. The new bank will also have more than 100,000 corporate and institutional clients.

For Allianz, which bought Dresdner in 2001 in a €23 billion deal, it means the end of attempts to control a “bancassurance” financial services group.

The deal is the second within two months in Germany following the sale in July of Citi's retail operations to Crédit Mutuel, of France, for more than €5 billion.

Allianz has been advised by Goldman Sachs, Shearman Sterling and Ernst & Young.