The German state of North Rhine- Westphalia has approved a draft law to split up and wind down WestLB AG as ordered by the European Union following the state- owned lender’s bailout during the global financial crisis.
North Rhine-Westphalia’s government is “setting the legal course in a timely manner for WestLB’s overhaul” as prescribed by the EU’s antitrust regulator, Norbert Walter-Borjans, the state’s finance minister, said in an e-mailed statement today.
The EU has ordered WestLB to sell or transfer assets to a so-called bad bank by June 30. The German federal government is concerned the bank may miss the deadline, Handelsblatt reported May 18, citing a letter from Deputy Finance Minister Steffen Kampeter to WestLB’s owners.
North Rhine-Westphalia’s parliament is scheduled to vote on the plan in June, the state’s government said. The minister is “confident” that the parties negotiating the breakup of the lender will answer questions related to valuation and responsibilities in the allotted time, the state government said.
Landesbank Hessen-Thueringen and a group of German savings banks plan to acquire WestLB’s Verbundbank unit, which conducts business with savings banks and medium-sized corporate clients. Two North Rhine-Westphalian savings banks groups that partly own WestLB will take on the unit’s pension obligations, the state said.
Pending parliament’s approval, WestLB’s bad bank, Erste Abwicklungsanstalt, will wind down additional assets, according to the statement. The state will be responsible for WestLB’s employees and other assets and liabilities, it said.
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