German landesbanks hit by Greece

German landesbanks WestLB and LBBW said their first-half earnings were weighed down by Greece exposure and restructuring, factors that made it difficult for either public sector lender to give a clear forecast for 2011. WestLB said ongoing restructuring expenses weighed down first-half earnings as the troubled German bank prepares to break itself up. The lender posted a net profit of €36m (£31.7m) in the January to June period, down by half from €67m in the year-earlier period as it transferred portfolios to the German government's bad bank. Restructuring expenses rose to €158m from €30m in the year-earlier period, as the transfer of portfolios to a state-controlled bad bank and impairment charges of €29m on Greek government bonds offset a recovery in trading income. Separately, Stuttgart-based LBBW swung to a €601m pre-tax profit in the first half of 2011, up from the €321m loss in the year-earlier period but weighed down by a €450m charge on Greece exposure.