German government unveils WestLB restructuring plan

The German government has submitted a revised restructuring plan for WestLB to the European Commission, which will make a decision by the summer. The plan proposes to cut WestLB’s total assets and risk-weighted assets by around one third, to between €80bn and €90bn by 2015.

It also proposes to split the bank into four businesses, which could be incorporated into mergers or sold at a later stage. If the EC rejects this approach, there is an option for WestLB to transfer its non-saleable assets to a bad bank. The rest of the portfolio would be sold.

In exchange for a state bailout in 2009, the EC ordered WestLB to be sold by the end of 2011 and for its WestImmo real estate arm to be sold by the end of 2010. This deadline was missed, but a sale of WestImmo is expected to take place within the next few months.

Some of its assets could be transferred to a bad bank,  making the business less risky. It could then be sold. WestImmo’s London head, Peter Denton, is set to leave the bank in April to join BNP Paribas’ UK lending team.