Owners rally to prop up WestLB
Owners of Germany's WestLB rallied to prop up the stricken state lender yesterday by shouldering what the bank said would be a 1 billion-euro loss in 2007 and writedowns just as big in the wake of the credit market crunch.
The announcement came a day after German financial watchdog Bafin and the country's central bank, the Bundesbank, attended an emergency meeting of WestLB owners to examine how to stablilize the lender.
It puts Germany back in the spotlight as one of the countries worst affected by the subprime-triggered credit markets crisis, which almost sank two German banks and has affected many more.
WestLB said its owners - local community savings banks and the state government of North Rhine-Westphalia - would foot the bill for the losses.
They are now keen on a merger with rival state lender Helaba and want to accelerate a planned shake-up of the bank, which a source close to the owners said could see it slash one third of its almost 6,000-strong workforce.
On Sunday, Bundesbank President Axel Weber and Jochen Sanio, head of Bafin, unexpectedly showed up for the meeting of owners aimed at resuscitating WestLB's finances.
Their presence illustrated the urgency of the situation. Both attended similar meetings last year for subprime casualties IKB and SachsenLB and helped broker financial rescues which averted the banks' collapse.
Europe's biggest economy has taken an especially hard beating from the credit market turbulence. Germany's regional state-backed landesbanks such as WestLB have been hit badly.
Struggling after the abolition of government guarantees that made it cheaper for them to borrow, many seized on the booming market in securitized debt to bolster profit only to run into trouble when credit markets seized up.
Agencies
(China Daily 01/22/2008 page17)
