Germany outlines new landesbank consolidation plan

City A.M. Reporter
GERMANY drew up a framework for how to consolidate its troubled public-sector landesbanks but made little headway, agreeing to meet again on the matter in November.

A meeting between Berlin and regional owners of landesbanks yesterday was a constructive start to consolidation talks but all options remain open, said deputy finance minister Steffen Kampeter.

“All participants committed themselves to increasing efficiency in this sector,” he said.

The landesbanks account for nearly a fifth of banking market share in Europe’s largest economy, yet are seen as the weak link in the sector. Several were hammered in the financial crisis and required billions of euros of state aid in bailouts.

Kampeter said Berlin had agreed with the landesbank owners -- represented by finance ministers of the regional states and heads of savings banks organisations -- on four criteria.

Consolidation should make business sense, satisfy European Union regulatory requirements, achieve political consensus and protect taxpayers’ money, he said.

Berlin is seen as having little influence on the regional, independent landesbanks, but could help moderate between them and encourage swift reforms by offering financial incentives.

“A few concrete proposals were discussed,” said Kampeter, adding these were a potential merger between WestLB and BayernLB, or between WestLB, Helaba and possibly another candidate.