24/06/2011
Shareholders agree on binding framework for the restructuring plan of WestLB
Shareholders agree on binding framework for the restructuring plan of WestLB
The shareholders of WestLB AG (WestLB) have reached an agreement with the Federal Agency for Financial Market Stabilisation (Bundesanstalt für Finanzmarktstabilisierung, FMSA), Erste Abwicklungsanstalt (EAA), and WestLB on a binding framework for the restructuring plan of WestLB.
The business related to the savings banks (Sparkassenverbundgeschäft), including the mid-cap corporate lending business, with a total balance sheet total of € 40-45 billion (risk weighted assets of approx. € 8.3 billion) and approx. 400 employees will be transferred on 30 June 2012 to a new credit institution (Verbundbank) established and capitalised by the Savings Banks Finance Group (Sparkassen-Finanzgruppe). The transfer to the Verbundbank and, as the case may be, to another entity held by the Savings Banks Finance Group, shall be effected by way of split-off pursuant to the German Transformation Act (Abspaltung nach dem Umwandlungsgesetz).
WestLB is free to sell further business units until 30 June 2012. Such business units and activities as will not have been sold until the end of this period, shall be transferred to Erste Abwicklungsanstalt (EAA) as of 30 June 2012. Pursuant to the framework agreement, WestLB may continue to write new business in accordance with its business and risk strategy applicable.
In the future, WestLB will operate as a Service and Portfolio Management Bank (SPM-Bank) for Verbundbank and EAA. In addition, it is the intention of the parties that WestLB should also render services relating to portfolios of third parties. A servicing agreement will be concluded with Verbundbank, initially for a period of two years, and the existing co-operation agreement with EAA, the currently agreed term of which is until 2013, will be extended for additional three years, i.e. until 2016. The State of North-Rhine-Westphalia (NRW) will assume the sole ownership responsibility (Eigentümerverantwortung) for WestLB. The Savings Banks and Giro Association of Rhineland (Rheinischer Sparkassen- und Giroverband, RSGV) and the Savings Banks and Giro Association of Westphalia-Lippe (Sparkassenverband Westfalen-Lippe, SVWL) will cease to be shareholders of WestLB. WestLB will remain a member of the guarantee fund of the central savings banks and central giro institutions (Sicherungsreserve der Landesbanken und Girozentralen).
The burden of the restructuring will be covered by equity capital that remains within WestLB after the split-off of the Verbundbank, and by the additional and, if possible, subordinated liability of the State of North Rhine-Westphalia in an amount of € 1 billion as well as by the ownership responsibility of the State of North Rhine-Westphalia. The silent partnership contribution of the Financial Market Stabilisation Fund (Finanzmarktstabilisierungsfonds, FMS) to WestLB will be reduced by € 1 billion by way of partial repayment to FMS, whereas the € 1 billion additional financial support injected by the State of North Rhine-Westphalia obtains such rank which is at least necessary to comply with the regulatory requirements within WestLB/SPM-Bank in view of the partial repayment of the silent contribution of FMS.
WestLB, its shareholders and EAA have committed to agree on appropriate measures to ensure WestLB's liquidity during the transformation phase. The parties understand that the current liquidity extended to WestLB by savings banks, the State of North Rhine-Westphalia and EAA will remain in place during the transformation phase. In addition, WestLB, the State of North Rhine-Westphalia and EAA committed to agree on appropriate measures to ensure the continuous acceptance of WestLB/SPM-Bank as market counterparty (within the limits of the current business volumes of WestLB), in particular with regard to derivatives.
The framework agreement, which shall be submitted to the European Commission, is currently still subject to the approval of the decision-making bodies of the parties.
If you have any questions on the above, please do not hesitate to contact WestLB’s Investor Relations team:
Barbara Zierfuß Tel.: +49 211 826-2533
Holger Grawe Tel.: + 49 211 826-2530