FRANKFURT (Reuters) - Commerzbank warned of tough times ahead, as it defended the controversial 5 billion euro (4.4 billion pound) takeover of rival Dresdner Bank a year ago that will now see the Dresdner Kleinwort brand name dropped.
"We have moved forward with the integration quicker than expected," chief executive Martin Blessing said in a statement on Monday, adding while the bank was on the right path, "we still have some tough times ahead of us."
Commerzbank announced the takeover of Dresdner a year ago and is in the process of cutting 9,000 jobs. It has completed about 1,800 of those cuts so far, the bank said.
The Frankfurt-based lender has drawn fire from shareholders for completing a risky acquisition in the midst of a global banking crisis.
Blessing, in part responding to political pressure from the German government, brokered a deal to buy Dresdner shortly before the collapse of Lehman Brothers last year, forcing him to press ahead even as the crisis worsened.
"Sometimes, people ask me whether we would take over Dresdner Bank again as of today. My view is clear: We have taken the right decision and I am pleased that we are implementing it despite the difficult environment," Blessing said.
Commerzbank said it will drop the storied Dresdner Kleinwort brand name as it overhauls its investment banking operations. Dresdner Bank acquired Kleinwort Benson in the 1990s.
Commerzbank expects to complete the integration of its investment banking operations with those of Dresdner Bank by year-end.
The banks will harmonise customer trading and post trade processing systems as part of further integration steps, Commerzbank said.
The two-phase acquisition of Dresdner Bank from insurer Allianz was completed on January12, and is partly responsible for forcing the German government to step in to save Commerzbank from collapse.
Matthew Clark, an analyst at Keefe, Bruyette & Woods said he was "dismayed" that Commerzbank bought Dresdner which was "borderline insolvent" at the time.
As part of its 18.2 billion euro bailout, Commerzbank was forced to accept stringent restrictions on strategy. It has to divest assets including its Eurohypo real estate financing unit, refrain from making acquisitions, and quit some markets.
For 2009, costs associated with integrating Dresdner Bank are expected to be around 2 billion euros.
The rescue of Commerzbank landed the German government a 25 percent stake in the retail and investment bank.
Commerzbank has said it plans to return to profitability by 2011.
(Reporting by Edward Taylor and Philipp Halstrick; Editing by Dan Lalor)