Bloomberg News

BayernLB to Sell Real-Estate Unit to Meet EU Conditions on Aid

October 17, 2011

Oct. 17 (Bloomberg) -- Bayerische Landesbank, a German state-owned lender bailed out in 2008, is likely to sell a real- estate unit to meet conditions set by the European Union for the aid.

BayernLB will probably sell its 92 percent stake in GBW AG because of the EU’s requirement that the company focus on its main businesses, Bavarian Finance Minister Georg Fahrenschon said in an e-mail from the ministry’s press department today.

Talks about BayernLB’s overhaul are taking longer than desired and the EU isn’t close to reaching a decision on the plan, EU Competition Commissioner Joaquin Almunia said last month. The bank needed 10 billion euros ($13.9 billion) in additional capital and a 4.8 billion-euro guarantee for a portfolio of asset-backed securities from its home state during the global financial crisis.

Towns, municipalities and savings banks will be among potential investors invited to make offers for GBW, the minister said. BayernLB will try to ensure that any prospective owner respects guidelines on rent adjustment and renovation, according to the e-mailed comments.

As part of its overhaul, the lender announced plans in 2008 to refocus operations and reduce the workforce by 2013.

GBW owns about 33,000 homes in the southern German state of Bavaria, according to its website. Deutsche Presse-Agentur reported Fahrenschon’s comments earlier today.

The European Commission, the EU’s executive arm, investigates whether state subsidies to lenders distort competition in the 27-nation EU.

--Editors: Andrew Blackman, Jeff St.Onge.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net.

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net.


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