A Bad Case of Cold Feeet

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They looked as if they'd make such a happy pair: Rolf Breuer and Bernhard Walter, two immaculately manicured German executives gazing manfully into each other's eyes over firm handshakes as they agreed in March to merge Deutsche Bank and Dresdner Bank into what some called the new fountainhead of Finanzplatz Deutschland.

But somewhere between the betrothal and the honeymoon, things turned sour. It started when Breuer raised the idea of spinning off some or all of Dresdner's London-based investment bank, Dresdner Kleinwort Benson, which he had praised as a "jewel" while setting up the deal. Over the following weeks, Dresdner executives complained of bullying by their Deutsche counterparts, convincing many that Deutsche's management perceived this "merger of equals" as anything but. A stream of indignant letters and phone calls went largely unanswered, and headhunters began picking off nervous Kleinwort Benson operatives.

Henning Schulte-Noelle and Paul Achleitner, the headmen at insurer Allianz AG, which was to get big pieces of Dresdner's mutual fund and insurance business, huddled with Breuer and Walter early last week in an effort to resurrect some of the lost magic, but to no avail. Dresdner's executive board voted to pull out of the deal. By week's end Walter was out of a job, and Dresdner looked vulnerable to being swept away by another suitor, with U.S. giant Citigroup rumored to be making advances.

While both banks insist they're not looking for anything serious just now, Breuer acknowledged warm feelings for Allianz and hinted at some sort of non-committal retail banking deal. But the wave of banking marriages in Europe, which had helped push the Germans to the altar, will likely require a more serious commitment to a new partner. Last week Britain's HSBC even pulled off a rare cross-border takeover of France's CCF, complete with the blessing of the French government. Deutsche and Dresdner may have married in haste, but neither will have much leisure in which to repent.