Second German bank lines up for rescue
One of the banks run by Germany's 16 states, BayernLB, has already appealed for help.
Hamburg -- A second German bank lined up Saturday for a government rescue, as officials reportedly debated whether to force recapitalization on shy commercial banks.
One of the banks run by Germany's 16 states, BayernLB, has already appealed for help, and a second landesbank, HSH Nordbank, run by the states of Hamburg and Schleswig-Holstein, said it had decided in principle to apply.
Landesbanks, which also have powerful non-government shareholders, have been among institutions hit hardest in the past year by investment in subprime US mortgages.
"The board of HSH Nordbank has decided in principle to make use of the government measures," a spokesman, Rune Hoffmann, told DPA. "But we are not under time pressure." He said the company's prime objective was a resumption of interbank lending. He added that HSH's diverse shareholders had not yet finally approved the move.
A third landesbank, WestLB, is on the verge of applying for help, the news weekly Der Spiegel reported Saturday.
The magazine quoted chief executive, Heinz Hilgert, saying WestLB would also seek a government takeover of its toxic securities.
The magazine said government officials were meanwhile debating how to force recapitalization on Germany's commercial banks, which have resisted taking the government offer.
Commercial banks reportedly fear a loss of credibility if they seek state aid. Their senior executives would also face a pay cap as a condition for aid.
Quoting sources, Der Spiegel said German Finance Minister Peer Steinbrueck planned to summon commercial bank chiefs to Berlin in two weeks to press them to jointly apply for help.
A fresh embarrassment awaited the state of Bavaria over its landesbank, BayernLB, which needs 6.4 billion euros in new funds, the magazine added.
It said Bavaria and its trustee savings banks had hoped for relief from a promise earlier in the year to guarantee 4.8 billion euros of the amount and did not realize the week-old federal aid package ruled this out.
The Bavarian government quarreled this week with the savings banks, which as joint owners of BayernLB successfully resisted a government bid to sack BayernLB chief executive Michael Kemmer.