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WestLB Submits Framework Plan for Restructuring

The owners of WestLB AG have reached an agreement to ring-fence substantial risks in the Bank´s structured portfolios. Securities with a nominal volume of roughly € 23 billion will be ring-fenced off the Bank´s balance sheet in a special purpose vehicle. This solution means that the losses included in the 2007 annual accounts as a result of the developments on the international capital markets will be compensated for in the current financial year and that future – as yet unidentifiable - risks will be ring-fenced. The financing of the special purpose vehicle will be secured by a guarantee from the owners of up to € 5 billion to cover any payment defaults. The owners will meet any possible losses from these securities portfolios in line with their shareholdings in WestLB up to an amount of € 2 billion, in compliance with their statement of January 20, 2008. Any further losses up to € 3 billion will be borne by the State of North Rhine-Westphalia (disproportionate share in the risk “shield”).

If and to the extent that claims arising from the disproportionate risk “shield” are asserted against the State of North Rhine-Westphalia, the federal state is entitled to demand that a corresponding number of WestLB shares currently held by the savings banks associations (RSGV and WLSGV) and the regional associations shall be transferred to the federal state against payment of the book value of the shares held by the above shareholders. Any claims shall be based on a calculated share price of € 220, less a discount of € 20 per share. For the regional associations a share price of € 220 shall apply. Instead of a transfer of the shares, the parties involved may also agree on a cash payment.

Michael Breuer, Chairman of the WestLB Supervisory Board, said:
“WestLB can now concentrate fully on its future realignment.” This expressly includes exploring the possibilities of a merger with Helaba.

Key Points of the Restructuring

WestLB´s Managing Board has submitted to the Supervisory Board a framework plan for restructuring and strengthening the business model by the year 2010. The plan envisages cost savings of € 300 million, which are to be achieved, among other things, by reducing headcount by between 1,300 and 1,500 employees during this period. At the same time income will be increased by approximately € 100 million through the savings banks and mid-cap initiative alone. The Supervisory Board instructed the Managing Board to work out the details of the restructuring based on the key points submitted.

Alexander Stuhlmann, Chairman of the Managing Board of WestLB, said:
“Headcount reductions are always painful. But there is no alternative. We have to begin quickly to shape the future of WestLB and make the remaining jobs as safe as possible.”

The key points of the restructuring are:

• strengthening the joint business with the savings banks and private clients 
• significantly expanding the mid-cap business and optimising the business with large corporates 
• further developing the real estate business and 
• focusing our investment banking activities.

Alexander Stuhlmann added: “The restructuring will not be to the detriment of our clients. On the contrary, we will invest in our clients and, apart from the mid-cap business, expand our product offering for the client business of the savings banks. Let me emphasise, however, that we do not wish to grow in competition with the savings banks, but in partnership with them.