WestLB’s future secure and on the right track
Joint statement by WestLB AG and its owners
- EAA solution lays the foundation for sustainable business model
- EU Commission’s state aid examination requires more time
The European Commission today announced an extension of the deadline for the final decision in the current state aid proceedings against WestLB. The Commission is currently examining the foundation of Erste Abwicklungsanstalt (EAA), the transfer of assets to EAA and the silent participation by the “Sonderfonds Finanzmarktstabilisierung” (SoFFin - Special Fund for Financial Market Stabilisation) in WestLB. On December 22, 2009, the Commission had provisionally approved this measure and launched an official examination. The final decision was originally scheduled to be taken by June 22, 2010.
By extending the deadline, the Commission is responding to the complexity of the transaction, whose examination requires more time. WestLB has provided the Commission with the comprehensive data needed for this purpose.
“I am convinced that the Commission will soon give its final approval of the approach adopted by WestLB,” said Managing Board Chairman Dietrich Voigtländer. “By establishing EAA, the Bank has fulfilled a number of material conditions imposed by the Commission in May 2009, especially in terms of the reduction in total assets and risk-weighted assets. Now that WestLB has been successfully restructured and risks have been spun off, this is a bank whose future is secure and has a viable business model focused on client business.“
The approach is supported by the owners and the Supervisory Board. “The restructuring process is proceeding according to plan and is being pushed ahead by the Managing Board with great expertise. The Bank’s owners unanimously and explicitly support this approach. Thanks to the successes achieved, WestLB can build on a strong foundation and take the next steps in the consolidation process,” said Michael Breuer, Chairman of the Supervisory Board of WestLB AG.
SoFFin also believes that WestLB is on the right track and has issued an official statement, according to which the appointment of Friedrich Merz as Divestiture Trustee has paved the way for the sales process demanded by the Commission. SoFFin expects WestLB to use the available time until the end of next year to shape its future under new ownership.
WestLB is the first German bank to have successfully implemented a workout entity under federal law. This pioneering role has been positively viewed by the market. Risk positions and non-essential strategic assets totalling € 77 billion have been spun off to EAA as part of this process.