AP
Germany's WestLB Bank Expects Net Loss
Monday January 21, 5:37 am ET
Germany's WestLB Bank Expects 2007 Net Loss of $1.46 Billion
DUESSELDORF, Germany (AP) -- German regional bank WestLB said Monday it expects to post a loss of $1.46 billion for 2007, due to exposure to the U.S. subprime crisis.
Following a meeting of its owners late Sunday, the bank -- majority owned by the state of North Rhine-Westphalia -- said that its owners would inject fresh capital into the bank to offset the loss. It also said that the write-downs would not be permanent.
The bank said in a statement it planned to push through a restructuring plan, which includes looking into the possibility of a merger with another state-owned bank.
"The owners agree that in addition to the measures decided today, restructuring needs to be implemented, and the bank's refocusing should be accelerated," WestLB said in a statement.
The troubled bank has been at the center of speculation about consolidation among Germany's state-owned banks following exposure to the U.S. subprime crisis and losses incurred from proprietary trading activities involving spread positions.
Following the subprime crisis, several of the state-owned banks had to make painful adjustments to the value of their investment portfolios.
WestLB's owners at the end of last year decided to enter talks with Hesse peer Helaba to explore the possibility of a tie-up between the two Western Germany Landesbanken.
The owners of WestLB "still support the continuation of detailed talks between WestLB and Helaba," WestLB said in its statement.
Dow Jones Newswires contributed to this report.