The Institutional Restructuring Unit of Dresdner Bank, a member organization of global insurance company Allianz, has confirmed that it will sell a portfolio of E1.4 billion non-strategic German loans to a consortium consisting of Lone Star and Merrill Lynch.

The sale is part of a long-standing strategic plan to return the Allianz Group bank to financial health after an extended period of difficulties. Jan Kvarnstrom, CEO of the Institutional Restructuring Unit (IRU) charged with restoring Dresdner Bank’s health, said that the sale would free the bank from the burden of a large part of its non-strategic business.

The portfolio consists of some 60% corporate loans and 40% commercial real estate assets, 40% of which are non-performing.

Lone Star and Merrill Lynch were the successful bidders in an auction process in December and, since then, have been in exclusive negotiations with the IRU. Since January the consortium has been conducting detailed evaluations of more than 2,500 loans.

Kvarnstrom has revealed that a price for the portfolio of loans has been agreed with the consortium but that it would not be disclosed. He added that the deal would not impact on Dresdner’s second quarter results.