views

WestLB to put 87bn in bad bank

GERMANY&rsquo;S WestLB will offload at least &euro;87bn (&pound;80bn) in risky assets into the country&rsquo;s first &ldquo;bad bank&rdquo;, a move other lenders may follow.<br /><br />The regional state-backed lender said it planned to start by next month off-loading some of the billions of euros in loss-making investments it racked up in the credit crisis.<br /><br />While WestLB is still in talks with German bank rescue fund Soffin over the details of moving the assets, it won agreement for the transfer yesterday from the European Commission, which has demanded a radical restructuring of the bank in exchange for approving state help.<br /><br />The Commission said that it had approved some &euro;6.4bn in additional aid from Soffin, which became necessary due to a change in conditions to set up WestLB&rsquo;s bad bank and WestLB&rsquo;s breach of regulatory capital requirements.<br /><br />A number of German lenders, mainly state-backed regional landesbanks like WestLB, are looking at setting up their own bad banks, which would remove the risk of further writedowns on their investments and let them concentrate on rebuilding healthy banking business.