Frankfurt - Germany's Commerzbank AG's shares fell sharply Monday after the Frankfurt-based bank agreed to pay 9.8 billion euros (14.4 billion dollars) to buy rival Dresdner.

While Commerzbank bank stock fell 7 per cent to 18.69 euros in early trading in Frankfurt, shares in Dresdner's parent, Allianz SE, slipped by about 1 per cent, as a result retracing some of the gains the giant insurer made last week.

The supervisory boards of Commerzbank and Allianz signed off on merging Germany's second and third biggest banks at separate meetings Sunday, as a result triggering a major reshaping of the country's fragmented banking business.

With total assets of about 1.09 trillion euros and 11 million German customers, forging a new merged Commerzbank-Dresdner bank will result in the emergence of a new banking force in Europe's biggest economy.

However, Deutsche Bank AG, which failed in a bid to merge with Dresdner eight years ago, would remain the largest bank in the country with assets totalling about 2 trillion euros.

Creating the new merged Commerzbank-Dresdner banking group will also result in the loss of 9,000 jobs from the two banks' combined workforce of 67,000 and a reduction in their branch numbers from 1,900 to 1,200.

Commerzbank's decision to buy Dresdner came about seven years after Allianz paid about 23 billion euros for Dresdner as part of an ambitious plan to sell its pension and insurance schemes through Dresdner's branch network.

However, since then a weak earnings performance by Dresdner has helped to undercut both Allianz's profits and its share price.

Indeed, Sunday's announcement was the climax of months of speculation about a tie-up between Dresdner and Germany's second biggest listed bank which followed Allianz saying in March that it planned to sell off its banking operation.

But while Monday's fall in Commerzbank shares reflected concerns about the integration costs resulting from acquiring Dresdner, Allianz shares rose last week on hopes that by selling off Dresdner it may bring to an end an unhappy period in its corporate history. (dpa)