Reuters: Regulatory News: BayernLB revamp to be finalized in 2 months - owner

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BayernLB revamp to be finalized in 2 months - owner Apr 17th 2012, 14:05 MUNICH, April 17 | Tue Apr 17, 2012 10:05am EDT MUNICH, April 17 (Reuters) - BayernLB [ BAYLB.UL ] will likely c onclude n egotiations with the European C ommission o n a revamp of the German publicly-owned wholesale lender w ithin two months, one of its owners said on Tue sday. The deal, a compromise between Bavaria's savings banks and the regional state of Bavaria, o n the necessary restructuring measures is being supported by 90 percent of the savings banks, The o Zellner, p resident of the Association of Bavarian Savings Banks sai d . The compromise was good enough to end the three year long negotiations with the EU Commission, Zellner added. The Commission which acts as the bloc's competition watchdog. According to several sources close to the savings banks, the municipally owned lenders will c ontribute between 1 .65 billion euros ($2.2 b illion) a nd 1. 8 billion euros to the restructuring. This will increase the savings banks' s stake in BayernLB to 20-25 percent from currently 6 percent, Zellner said. BayernLB ran into trouble in 2008 after risky investments turned sour in the financial crisis. The state of Bavaria injected 10 billion euros ($13 billion) in fresh capital, boosting its holding to 94 percent and diluting the savings banks' stake to 6 percent. The EU had criticised the contribution of the savings banks to the revamp as too low and has demanded that a sale of BayernLB's mortgage unit LBS Bayern to the savings banks must reflect market prices. Once all restructuring measures are in place, BayernLB will only be roughly half the size it had been before the financial crisis. Link this Share this Digg this Email Reprints

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