SoFFin and Owners agree a timetable for stabilising WestLB
SoFFin, WestLB and its owners this evening agreed on a timetable to stabilise the bank.
A portfolio of circa €85 billion will at the latest on 30.04.2010 (with retrospective effect from 01.01.2010) be hived off into a work-out entity in accordance with Section 8a of the FMStFG measures.
In a first step, the hitherto ring-fenced portfolio under Section 8 of the FMStFG measures will be split off before 18.12.2009, subject to the required permission of the EU commission.
The work-out entity will contain, in order to cover expected losses, €3 billion of capital from WestLB as well as a €1 billion guarantee from the existing shareholders and their security reserve schemes. The losses of the work-out entity which are not covered by this guarantee and capital will be covered by the existing shareholders duty to settle losses.
The SoFFin will in a first step take a silent participation to the value of €3billion in the WestLB core bank which from 01.07.2010 can be converted to shares.
All the parties declare, subject to the necessary supervisory body decisions that the agreed parameters of the timetable are binding.
As a result of the SoFFin and owners compromise, WestLB can now proceed to implement the required reduction in balance sheet and risk activities required by the EU Commission.