To stop it falling into insolvency, the WestLB, based in Dusseldorf, will be the first German bank to use federal government aid.
A “Landesbank” is a German bank controlled by the regional state governments. The WestLB Bank is owned by the state government of North Rhine Westphalia and that state’s non-profit public savings banks.
It had at one time visions to become an international player but instead made all the stupid mistakes that all other stupid banking upstarts made and followed the lemmings off the cliff in the so-called “Global Financial Crisis”.
Whether it became a victim to the easy credit conditions, the sub-prime lending, deregulation, sleeping so-called regulators in the US, predatory lending , over-leveraged debt burdens or the boom and bust of the shadow banking system – or all of the above – nobody knows for sure.However the WestLB Bank screwed up enough to have about 85 billion Euros of “distressed-credit” declared on its books and hence the government bailout.
The exact fine details will still to be worked out in this rescue plan and those “bad” parts of the bank having to be finally identified by the other German landesbanks and the federal government, through its bank rescue arm SoFFin.
BaFin, Germany’s powerfull banking regulator has the authority to close struggling banks and nationalize them, but because of this bailout has thus far avoided having to step in.
Tags: Berlin, germany, landesbank, News
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