Chief of failing bank to step down

24th October 2008, Comments 0 comments

The expected announcement that Michael Kemmer had decided to leave his post comes just one day after Bavarian Finance Minister Erwin Huber said he was resigning in the face of the financial problems confronting BayernLB.

Munich -- The chief of the Munich-based BayernLB is to step down in the wake of the financial crisis that has engulfed the state lender, sources told the DPA.

The expected announcement that Michael Kemmer had decided to leave his post comes just one day after Bavarian Finance Minister Erwin Huber said he was resigning in the face of the financial problems confronting BayernLB.

A BayernLB spokesman declined to comment on the reports of Kemmer's possible departure from the Bavarian state-owned bank.

The troubled BayernLB this week asked for 5.4 billion euros (7.1 billion dollars) from Berlin's bank rescue plan as a result, becoming the first German financial house to apply for aid under the 480-billion-euro package passed by parliament last week.

The latest upheaval at BayernLB came as Bavaria's ruling Christian Social Union held talks to form a new coalition government with the small business-leaning Free Democrats following last month's state election.

Badly hit by the world financial crisis, BayernLB also announced Wednesday it was launching a review of all its costs, including the bank's 19,000 world-wide labor force with the bank having already warned that it might not be able to avoid job cuts.

The Bavarian state bank is planning a 400-million cost-cutting project in the next three years.

As part of its effort to boost its capital base, BayernLB is also planning to raise about 1 billion euros from its owners, which includes 700 million euros from the Bavarian state government and the 300 million euros from the Bavarian savings bank association.

DPA/Expatica

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