The Commission approved the €5 billion risk shield for WestLB and accompanying measures. Germany committed to change the bank's ownership structure through a public tender procedure before the end of 2011.
The Commission approved the €5 billion risk shield for German bank WestLB and accompanying measures, following an in-depth investigation opened in October 2008.
On 30 April 2008, the Commission authorised a risk shield by the State of North Rhine-Westphalia to protect the bank against the volatility of its €23 billion structured investment portfolio.
The latest amendments to the viability plan submitted by Germany show a considerable reorientation of WestLB's business into less risky activities. Under the plan, WestLB will in particular entirely stop certain risky business activities, e.g. proprietary trading, thereby reducing its assets by 50%. In future, the bank may maintain its activities in three core business areas:
- so-called 'transaction banking' (i.e. the treatment of payments)
- loans to medium-sized companies and its savings banks partnership ('Verbund Mittelstand') and
- corporate banking (e.g. loans to large companies), capital market activities (including financial instruments trading) and structured finance (e.g. financing of large projects).
Finally, Germany committed to change the bank's ownership structure through a public tender procedure before the end of 2011.
Press release
© European Commission
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