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Ailing German Bank Seeks PartnerDUESSELDORF, Germany (Reuters) — Problems banks continued Wednesday for German banks. The ailing regional bank WestLB said on Wednesday that it was looking for a partner after problems stemming from credit markets turmoil forced its owners to step in with a 5 billion euro ($7.8 billion) rescue. WestLB had already been struggling with an expensive trading bungle when the credit crisis struck. It said the global credit turmoil had cost it over 2 billion euros last year and that there would be more expense in 2008. However, the chief executive Alexander Stuhlmann said the bank’s future was stable after a local government-led rescue that will cover up to 5 billion euros of losses from WestLB’s risky investments. He also flagged the regional lender’s interest in finding a partner. “We are tackling the restructuring of the bank with full power,” Mr. Stuhlmann said. “With this, the bank is readying itself to play its role in the consolidation of Germany’s landesbanks.” The bank reported losses Wednesday of $2.51 billion for the year, higher than predicted, and largely because of exposure to the subprime mortgage market in the United States. The loss compared with a gain of 799 million euros ($1.25 billion) in 2006. The pretax loss was 1.5 billion euros ($2.35 billion) compared with a pretax profit of 1 billion euros ($1.57 billion) for the previous year. Germany has been among the worst affected by the credit market crisis, which triggered the near collapse of regional bank SachsenLB — now called Sachsen Bank — and small-company lender IKB. Struggling after the abolition of government guarantees that made it cheaper for regional state-backed banks to borrow, many seized on the market in securitized debt to bolster their profits, only to run into trouble when credit markets seized up. WestLB ran a series of investment vehicles with a value of about 25 billion euros and problems with these investments have gradually eaten up its capital. Had the government of North Rhine-Westphalia not stepped in to guarantee its investments, WestLB would have seen its capital dwindle to a level that could have forced its closure, sources familiar with the matter said earlier this week. Tag CloudExternal InformationAdditional InformationPrivate equity groups join queue to take look at Emap operations...Flat prices on apartments... Online Scrabble Craze Leaves Game Sellers at Loss for Words... 46 Million Nokia Cell Batteries Defective... Where Am I?News Main Page - Business - Ailing German Bank Seeks Partner |
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