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Bayern LB and WestLB study possible merger
By Geir Moulson |
September 22, 2010, Wednesday
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Print Edition
Print Edition
TWO of Germany's public-sector wholesale banks, Bayern LB and WestLB, said on Monday they will consider a merger - a move that came amid mounting pressure for consolidation of the so-called Landesbanken.
BayernLB and WestLB said they aim to decide by the end of this year "whether a merger makes economic sense."
The Landesbanken are owned by a combination of regional governments and municipally backed local banks. They traditionally help fund local businesses.
However, big bets on global financial markets and large investments in securitized debt linked to the United States subprime housing market saw several of them rack up huge losses that forced Germany to bail them out.
All seven Landesbanken passed recent European "stress tests," but officials would like to see reform of the sector after years of talk about possible consolidation.
Also on Monday, Finance Minister Wolfgang Schaeuble invited his state-level counterparts and regional banking officials to a meeting on Tuesday to discuss the banks' future.
German Economy Minister Rainer Bruederle said the merger talks were overdue and urged Germany's state governments "to take advantage of the moment," given that "substantial sums of money have been burnt," the German news agency DAPD reported.
In the early days of the financial crisis, Saxony's SachsenLB was sold hastily in 2007 to a larger peer, Landesbank Baden-Wuerttemberg, after news emerged of its exposure to subprime real estate loans.
"Now is the right time to start the consolidation process," WestLB CEO Dietrich Voigtlaender said. "A merger of WestLB and BayernLB could result in a strong, competitive corporate financing bank."
BayernLB and WestLB said they aim to decide by the end of this year "whether a merger makes economic sense."
The Landesbanken are owned by a combination of regional governments and municipally backed local banks. They traditionally help fund local businesses.
However, big bets on global financial markets and large investments in securitized debt linked to the United States subprime housing market saw several of them rack up huge losses that forced Germany to bail them out.
All seven Landesbanken passed recent European "stress tests," but officials would like to see reform of the sector after years of talk about possible consolidation.
Also on Monday, Finance Minister Wolfgang Schaeuble invited his state-level counterparts and regional banking officials to a meeting on Tuesday to discuss the banks' future.
German Economy Minister Rainer Bruederle said the merger talks were overdue and urged Germany's state governments "to take advantage of the moment," given that "substantial sums of money have been burnt," the German news agency DAPD reported.
In the early days of the financial crisis, Saxony's SachsenLB was sold hastily in 2007 to a larger peer, Landesbank Baden-Wuerttemberg, after news emerged of its exposure to subprime real estate loans.
"Now is the right time to start the consolidation process," WestLB CEO Dietrich Voigtlaender said. "A merger of WestLB and BayernLB could result in a strong, competitive corporate financing bank."
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