Bloomberg, the news agancy, releases that Landesbank Baden-Wuerttemberg, Germany’s biggest […]
Bloomberg, the news agancy, releases that Landesbank Baden-Wuerttemberg, Germany’s biggest state-owned lender, will « close down or sell subsidiaries in Ireland, Luxembourg and a broker dealer unit in New York. » LBBW group will cut about 2,500 jobs, or a quarter of its workforce, by 2013 as the bank predicts a “substantial loss” this year, reports Bloomberg.
« The reorganization plan, approved by the bank’s owners’ meeting and supervisory board today, includes slashing assets by 40 percent, scaling back non-strategic operations and selling equity investments, the Stuttgart-based lender said in a statement. LBBW’s assets totaled 448 billion euros ($652 billion) at the end of June.
LBBW said the measures come in response to European Union demands and will help cut annual costs by 700 million euros. The bank’s owners including the state of Baden-Wuerttemberg, agreed in April to inject 5 billion euros in capital and cover potential losses of as much as 12.7 billion euros. Final EU Commission approval for the bailout depends on the bank’s reorganization.
“We are fully aware that the measures will be painful cuts for the banks and many of our employees,” Chief Executive Officer Hans-Joerg Vetter said in the statement. “This is unavoidable to make the bank future-proof and to adapt it to the significantly changed market environment.”
LBBW expects a loss this year because of restructuring expenses, higher bad loan provisions and “negative impacts” from the lender’s real-estate business. LBBW declined to give an exact estimate. The lender replaced CEO Siegfried Jaschinski in May with Landesbank Berlin Holding AG’s Vetter after reporting a loss of 2.1 billion euros last year.
As part of the reorganization, LBBW will close down or sell subsidiaries in Ireland, Luxembourg and a broker dealer unit in New York. It will also close down all of its European representative office in Vienna, Zurich and Moscow. The bank plans to focus on business with small and medium-sized corporate customers, private clients and savings banks.