WestLB sale due to start this month

City A.M. Reporter
THE starting gun for the sale of German landesbank WestLB’s has to sound by the end of this month, the new finance minister of its home state of Northern Rhine-Westphalia said yesterday.

The new state government is hoping to find a buyer among rival landesbanks, finance minister Norbert Walter-Borjans said. The bank has to be sold off by the end of 2011, as required by the European Union, as a condition of its bailout during the credit crisis.

WestLB’s restructuring programme involved transferring about €77bn (£53bn) of its toxic and non-strategic assets to a “bad bank”, which will be liquidated gradually.

The premier of the southern German state of Baden-Wuertemberg, Stefan Mappus, agreed that the landesbank sector was ailing and in dire need of support, but said he wanted his state’s landesbank, LBBW, to be restored to health before stepping towards a merger.

“Baden-Wuerttemberg will actively push ahead with this,” he said in remarks citing Frankfurt-based landesbank Helaba as a preferred partner. “Outside of Helaba, there aren’t too many landesbanks that can say they are healthy,” he said, adding that the country’s “eight landesbanks are too many, especially when six have no business model”.

Helaba this week said it could take part in consolidation of the troubled sector, but set a high bar for such a move.

Germany’s independent public-sector landesbanks account for 18 per cent of total market share, but critics say they are too small to compete with international players on capital markets, and too big to act just as suppliers of corporate loans to mid-size companies.