WestLB´s Shareholders Approve Transfer of € 85 Billion Portfolio to Workout Entity
Decision is a milestone in the strategic realignment of the Bank
WestLB´s shareholders today formally approved the contractual agreements providing for the transfer of non-strategic activities with a volume of approximately € 85 billion to a federal law workout entity pursuant to § 8a of the amendment to the Financial Market Stabilisation Act (FMStFG). The main portfolio will be transferred by April 30, 2010 at the latest with retroactive effect from January 1, 2010. In a first step a sub-portfolio of approximately € 6 billion will be transferred to the workout entity.
Dietrich Voigtländer, Chairman of the Managing Board, said: “The decision by the shareholders is of central importance for WestLB. We are now implementing a strategy that we have been driving forward forcefully for more than twelve months. I am very grateful that we are able to take this path in conjunction with our owners and SoFFin and position an efficient core bank for the consolidation process.”
WestLB is the first German bank to transfer and thereby legally separate its high-risk and non-strategic assets. The move means that WestLB is able to comply fully with the requirements imposed by the European Commission regarding the reduction of its balance sheet and risk-weighted assets. Moreover, the core bank will be supported by a sustainable, viable business model with a clear client focus.
The workout entity will receive € 3 billion in capital from WestLB as well as € 1 billion in guarantees from the owners. The ring-fenced portfolio comprises the refinancing notes for the Phoenix special purpose vehicle, selected foreign government and municipal bonds as well as securitised and government-guaranteed U.S. student loans. Liquidity lines for U.S. municipalities and structured financings from sectors which no longer form part of WestLB´s core business are also included in the portfolio.
SoFFin will take a silent participation to the value of € 3 billion in the core bank and has the option of converting its silent participation into shares from July 1, 2010.
Dietrich Voigtländer added: “The core bank will be adequately capitalised as a result of the measures approved by the shareholders. It will be a stable and reliable partner for the ambitious financing requirements of its clients – in its home market of North Rhine-Westphalia, in Germany and internationally.”