PRESS RELEASES 2008

09/24/2008

Important step towards strengthening the cooperative financial services network

DZ BANK and WGZ BANK sign Memorandum of Understanding

The management boards of DZ BANK and WGZ BANK have signed a joint Memorandum of Understanding (MoU). The supervisory boards of the two banks discussed the MoU at their respective meetings today. The MoU sets out the main steps to be taken to combine the cooperative central institutions with the joint goal of pooling the strategic competence and the operating strength of the central institutions and the cooperative sector’s specialised service providers in structures that are fit to meet future demands. This step is to increase

proximity to the local cooperative banks,
the quality and efficiency of decision-making and implementing procedures as well as
transparency with regard to decisions and contributions to performance.


“This is an important first step on the way towards the merger. As a unified central institution we will take up and continue the successful business-policy orientation of DZ BANK and WGZ BANK. Combining the strengths of the two banks will create new earnings and growth potential for the local cooperative banks, the unified central institution and the cooperative sector’s specialised service providers,” said Wolfgang Kirsch, Chief Executive Officer of DZ BANK. Werner Böhnke, Chairman of the Managing Board of WGZ BANK, explained that: “With the development into a holding structure that has been agreed we will further strengthen the position of the local cooperative banks, increase their competitive advantages and thus the attractiveness of our organisation. In this way, we will make our cooperative banking group more attractive not only for our customers and members, but also for our employees.”

The two banks agree that the joint central institution will be closely oriented to the local cooperative banks and continue to organise its distribution on the basis of decentralised structures. The cooperative network business with its offer of subsidiary products and services for the local cooperative banks is to be expanded. Cooperation with the local cooperative banks is to be focused in future also particularly on the SME segment. In addition, the joint central institution will grasp the arising opportunities for creating additional value in the corporate and investment banking sectors as well as in private wealth management.

Integration of the two institutions and new management structure

DZ BANK and WGZ BANK intend to complete the integration of the two banks – in agreement with the employee representatives - within two years of the merger. Both banks regard pooling the general strategy and steering functions in a single unit with only a few tasks related to the cooperative network to be the most suitable and expedient organisational structure. The unified central institution and the cooperative sector’s specialised service providers are accordingly to be transferred to a holding structure on completion of the integration at the latest in order to implement the further development of the strategic and steering approach. The name of the unified central institution is to be DZ BANK, its headquarters will be in Frankfurt. It will operate with the claim “Die Initiativbank” and as “DZ BANK. Die Initiativbank”, thus combining elements of both banks. So far it has been planned that the management and control of the business with the local cooperative banks as well as with the SME segment are to be concentrated in Düsseldorf. The current offices of WGZ BANK are also to carry out back office and settlement activities. Central services and steering functions are to be gradually pooled in Frankfurt.

The MoU contains the following joint recommendations: The Chief Executive Officer of the unified central institution is to be Wolfgang Kirsch, the Chairman of the Supervisory Board Werner Böhnke. The following members will belong to the Board of Managing Directors: Albrecht Merz and Frank Westhoff will take over the functions Group Finance, Controlling, Risk Controlling and Back Office; Hans-Bernd Wolberg will assume responsibility for the subsidiary SME corporate customer business and for servicing the local cooperative banks. The divisions responsible for the Capital Market Business, Investment Banking, Treasury and the further development of Private Wealth Management will be headed by Lars Hille, Wolfgang Köhler and Karl-Heinz Moll. Thomas Duhnkrack will take over the responsibility for Corporate Finance and Structured Finance as well as the coordination of the foreign branches network. Thomas Ullrich will be responsible for the functions IT, Operations and Transaction Banking. Michael Fraedrich will occupy a leading position at a specialised service provider within the cooperative sector.

The final determination of the areas of board responsibility is to take place in spring 2009 with regard to the organisational structure that is to be worked out jointly.

The Board of Managing Directors of the unified central institution and those responsible for the other business segments of the group will form a Management Board to which further CEOs from the subsidiaries may be added. This is intended to ensure a coordinated business-policy orientation between the central institution and the cooperative sector’s specialised service providers.

DZ BANK and WGZ BANK expect direct earnings and efficiency potential of between EUR 100 and 120 million a year. These synergies are to be reaped in particular from better joint marketing with the local cooperative banks as well as by establishing a uniform processing and IT platform. Both banks attach great importance to employee retention. All personnel measures will, therefore, be conducted within the context of an open, transparent and fair process and shall not lead to one-sided costs at one of the two banks. The necessary talks with the employees’ councils are yet to be conducted.

Cooperative network board

In order to meet even better the growing challenges posed by the market and the competitive environment, the cooperation between the local cooperative banks with the new central institution and the cooperative sector’s specialised service providers will in future be driven even more strongly by joint goals and entrepreneurial responsibility. Both banks have therefore agreed that an initial step towards the further development of the structure of the cooperative financial services network will be to set up a cooperative network board at the joint central institution after the merger, which is to ensure the close involvement of the primary banks in the development and implementation of the product and distribution strategies of the central institution and the cooperative sector’s specialised service providers. The cooperative network board is to have between 30 and 40 members.

Transaction structure, valuation and project organisation

DZ BANK and WGZ BANK are aiming to merge into a unified central institution as of 1 January 2009. The annual general meetings of the two banks are to approve the merger in early summer 2009 with retroactive effect as of 1 January 2009. All WGZ BANK’s assets will be transferred to DZ BANK. In return, the WGZ BANK shareholders will receive shares in DZ BANK within the framework of a capital increase. The conversion ratio will result from the company valuations for the two banks which will take place now that the Memorandum of Understanding has been concluded. The due diligence and the company valuations will be carried out by PwC and by Ernst&Young.

With today’s signing of the Memorandum of Understanding DZ BANK and WGZ BANK also commence the project organisation for the preparation and the subsequent implementation of the integration of the two banks. The steering committee for the project organisation is made up of Wolfgang Kirsch and Albrecht Merz from the Board of Managing Directors of DZ BANK as well as Werner Böhnke and Thomas Ullrich from the Managing Board of WGZ BANK.

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Contact:

Martin Roth, Head of Division Communication & Marketing
Tel.: +49-69-7447-42750

Dr. Ilja-Kristin Seewald, Head of Department, Press, Internal Communication and Public Affairs
Tel.: +49-69-7447-42894