The seemingly unending saga of the break-up of WestLB is entering the endgame, as the German government and regional governmental authorities have agreed to the outline of a restructuring framework. The break-up was forced on the bank by the EU in return for its approval of state aid that kept the bank afloat during the financial crisis. Reuters reports that
The plan sees Germany’s third-largest landesbank – owned by the German state of North Rhine-Westphalia (NRW) and local savings banks – spin off a new bank with a balance sheet of 40-45 billion euros catering for regional savings banks.
The new bank is expected to have just one-tenth of the number of employees that WestLB did. It will have a year to sell off its corporate lending and project financing units, along with its derivatives business. After that, those companies would be placed in WestLB’s bad bank, Erste Abwicklungsanstalt.