[FONT="][WDLG.UL APOL.O BX.N] * EU Commissioner Almunia says is studying revamp plan
* Bank proposes its own break-up
* Core bank to be kept under public-sector control
* Other units to be sold or wound down
* Owners also agree on how to share additional charges
(Adds comments from Almunia, details from sources)
By Arno Schuetze and Matthias Inverardi
FRANKFURT/BRUSSELS, Feb 16 (Reuters) - European Competition
Commissioner Joaquin Almunia has promised swift action on the
fate of ailing German lender WestLB [WDLG.UL] after its owners
came up with a last-minute revamp plan.
"I am analysing the submission. I will be in contact with
the (German) federal government in coming days to discuss the
next steps," Almunia said on Wednesday.
The plan submitted on Tuesday involves spinning off a core
bank, dubbed Verbundbank, that only caters to municipally-owned
savings banks, and selling or winding down the other units.
A detailed plan will be worked out over the next two months,
a source close to the negotiations said. [ID:nN15209402]
Two other options being discussed with the EU are a sale of
the lender and further heavy downsizing.
But sources close to WestLB said that a sale of the whole
bank is unlikely to go through and simply shrinking the lender
may not fulfil EU criteria for creating a viable bank.
The owners of WestLB, a regional landesbank that lost
billions of euros on risky investments in the financial crisis,
struggled for months to agree a restructuring plan that they
hope will get EU approval.
Almunia asked for the bank -- which once tried to compete
with the likes of Deutsche Bank <DBKGn.DE> -- to be restructured
after it received billions of euros in state aid.
According to the revamp plan which has best chance of coming
into effect, key parts of the bank will be kept under
public-sector control as the Verbundbank, while other bits would
be offered to investors and unsellable units tranferred to
WestLB's bad bank. [ID:nLDE71D1FT] [ID:nLDE711296]
The Verbundbank would have total assets of 40-45 billion
euros ($54-$81 billion) and equity worth 1.0-1.2 billion euros
sources said.
WestLB is 50.06 percent owned by savings bank organisations
RSGV and WLSGV, while the regional state of North
Rhine-Westphalia owns the rest.
The new core bank will see RSGV and WLSGV keeping slightly
less than half of the shares, while the state will pull out
completely, a model the owners are confident will comply with
the EU's demand of an ownership change, sources said.
The rest of the shares of the new entity will be bought by
other savings bank organisations or by other landesbanks --
roughly 25 percent by each of the two groups, sources said.
Investors such as Apollo [APOLO.UL], Blackstone <BX.N> and
JC Flowers have expressed interest in units of WestLB -- like
its project finance and international businesses -- but no deal
is imminent, sources said.
(Additional reporting by Matthias Sobolewski, Gernot Heller and
Foo Yun Chee; Editing by David Cowell)
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