Statement on the Rating Decision of S&P
S&P today reviewed the ratings of all Landesbanks. The long-term rating of several Landesbanks was downgraded. WestLB´s long-term rating was lowered from A-/Credit Watch Negative to BBB+/Negative Outlook. The decision of S&P is, in our opinion, difficult to understand, and in particular its timing – immediately before important strategic decisions concerning the future of the German Landesbank sector are taken – appears inappropriate. We would have expected the rating agency to await the outcome of the decision-making process between the federal government, federal states and the owners of the Landesbanks.
WestLB has already made considerable progress in finding solutions to its strategic challenges:
- The Phoenix risk shield has removed toxic assets from the balance sheet, stabilising the Bank in a challenging environment.
- According to public statements by the federal government, a mutually acceptable decision of the European Commission regarding the state aid proceedings of WestLB is expected shortly.
- WestLB´s owners have expressed their unconditional support for the Bank - in particular also in the transformation phase leading to a possible bidding procedure.
- WestLB´s profit before taxes for the first quarter of 2009 will be the best pre-tax profit since the spin-off of NRW.BANK. The profit also fully includes substantial burdens arising from the mark-to-market valuation of government bonds in the first quarter. WestLB´s client-driven business model, which employs its capital market and structuring expertise for the benefit of savings banks and medium-sized companies as well as domestic and international corporations, has been instrumental in achieving this.
Notwithstanding the rating action taken by S&P, WestLB and its owners will press ahead systematically with the strategic realignment of the Bank which has been successfully initiated.