EU, Germany discuss alternatives for WestLB aid

BRUSSELS - The European Commission has opened talks with German authorities on alternative ways to restructure German regional lender WestLB, a spokesman for the European Union’s executive said on Tuesday.

By (Reuters)

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Published: Tue 31 Mar 2009, 6:46 PM

Last updated: Thu 2 Apr 2015, 7:46 AM

“There was a deadline of today for the submission of details of a sale of WestLB and in particular, the premise was that there would be a consolidation amongst Landesbanken,” European Commission competition spokesman Jonathan Todd said.

“The German authorities have informed us that they are no longer working on that premise and therefore discussions have already begun today with the German authorities on alternative solutions to restructure WestLB,” he told a news briefing.

WestLB, owned by the state of North Rhine-Westphalia and local savings banks, had said it would sell some or all of its business to get EU approval for its state rescue last year.

Todd said the Commission aimed to conclude discussions with the German authorities within the next few weeks, with a view to taking a decision on the restructuring aid before the summer.

In December 2008, the Commission—which monitors state aid in the 27-country bloc—extended a deadline for WestLB to submit its restructuring plan after the initial proposal fell short of the Commission’s requirements.

The lender was protected by 5 billion euros ($6.66 billion) in public-sector guarantees last year after it was hit in the global financial crisis.

“Clearly WestLB has received a lot of restructuring aid and therefore needs to be restructured,” Todd said.

“The Commission is happy to discuss alternative means to restructure the bank than that originally foreseen of consolidation with other Landesbanken,” he said.

The Commission is also examining whether changes are needed at other German banks such as landesbank BayernLB and Germany’s second-biggest lender Commerzbank in return for authorising state aid.

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