Dutch bancassurer Achmea rekindled a five-year-old courtship with co-operative Rabobank, announcing a merger yesterday that would make them the largest bank-insurer in the Netherlands. The unlisted financial groups failed to agree on a link-up in 1993, but recently reopened discussions.

Dutch analysts said the move would increase competition in the Dutch insurance market, not only affecting their main competitors ABN Amro, ING and Fortis, but making it especially difficult for smaller financial groups to stay independent.

Rabobank reported pre-tax profits of £12.7 million at its Irish operation in Dublin's IFSC last year. The Dublin office employs about 35 people providing international banking and treasury services, as well as domestic banking services to Irish companies.

"The merger wave among financial services groups will accelerate on this," said analyst Mr JeanPaul van Bavel of Van Lanschot Bankiers in Amsterdam.

Rabobank, already active in insurance through its subsidiary Interpolis, will have a more diverse insurance portfolio for its clients as result of the link-up, while Achmea will have at its disposal a broader network to sell its products.

"Achmea has a lot of knowledge in employee benefit insurance and affiliated products and this is helping us as our clients were asking for those products," said a Rabobank spokesman, Mr Hans van Mierlo. He said it was too early to specify the cost savings as result of the planned merger, but he added it would also be an advantage to share the costs of information technology (IT).

Achmea has the biggest domestic non-life insurance market share in the Netherlands. The new group will take the number two spot in life insurance. - (Reuters)

The companies said in a statement yesterday that the intended merger would be completed within three years. The alliance would be realised in three stages. The two will create a joint venture as of January 1st, 1999.

The joint company will incorporate Achmea in its entirety and include Rabobank's insurance and asset management services.

The second step will be the market-oriented bundling and reorganisation of activities within the group where practical and efficient , the statement said.

"Ultimately, the two parties intend to transfer all their activities to a new integrated financial service group within three years," it continued.