WestLB dismantling gets green light from German region
The German region of North Rhine-Westphalia approved a plan Thursday to dismantle the country's third largest regional bank, laid low by the global economic crisis.
The regional legislature approved the plan under which it will inject one billion euros ($1.5 billion) into WestLB, in which it owns 50 percent, to help wind up its activities.
The investment will go into a part of WestLB that will hopefully be sold off to private investors.
Financial services to local savings banks that own the other half of WestLB will be rolled into another company with a balance sheet of approximately 40 to 45 billion euros.
The plan was agreed by the regional government and savings banks last week amid increasing market concerns that WestLB could collapse, sending shockwaves through the regions' economy.
The German federal government was expected to submit the proposal for urgent review to the European Commission in Brussels.
Authorities in Berlin let it be known earlier this year they were not prepared to put more money on the table for WestLB, which received three billion euros in 2009 to create a "bad bank" of toxic assets.
Since the international financial and economic crises erupted, four of Germany's eight regional banks have sopped up more than 20 billion euros in aid, mainly from regional governments that are major shareholders.
© 2011 AFP