WestLB says farewell
German lender WestLB has finally been broken up after years of continued government bail-outs.
The entire bank’s international business, including its trade, commodity and export finance business is being wound down, and there will be widespread redundancies.
A financial services company called Portigon took over the bank on Monday 2 July to manage the winding down of portfolios.
A ‘bad’ bank known as Erste Abwicklungsanstalt (EAA) has already been winding down the bank’s bad assets over the course of last year. Portigon will now help EAA with the winding down of additional assets and will not oversee any new business.
However, with transactions such as export finance deals often carrying tenors of 10 years-plus, it will take some time until these transactions fully repaid.
Those working in front office origination roles in trade and export finance are facing imminent redundancies, while others will remain employed to oversee the current business portfolio.
As many hold out for their final redundancy packages, there are some that have already secured new employment.
Market rumours reveal that Michael Sobl, executive director, structured finance at WestLB is set to move to ING in Frankfurt later this year. More new hires are expected to be announced over the course of the next few months.
The European Commission approved a restructuring plan last December and set a deadline of 30 June 2012 for the break-up of the WestLB after successive bail-outs failed to save the bank.
Since 2008, the bank has received a capital injection of €3bn and transferred €11bn-worth of toxic, impaired and non-strategic assets to a wind-down agency.
Under the restructuring plan, all WestLB so-called Verbundbank activities, such as services for regional savings banks and mid-sized corporates have been carved out of the bank and sold to the Frankfurt-based Landesbank Helaba. A total of 415 members of staff will be transferred to Helaba. All remaining assets have now been transferred into the EAA.
A number of WestLB’s overseas operations have already been taken over. In June WestLB in Brazil was taken over by Japanese bank Mizuho while in early July WestLB’s Russian subsidiary has been bought by a mid-sized Russian bank called Expobank. Multimillionaire Igor Kim is the owner of Expobank, which is the former Russian subsidiary of Barclays Bank acquired by Kim last October.