March 21 (Bloomberg) -- WestLB AG, the state-owned German lender bailed out during the global financial crisis, said its 2011 loss narrowed after cutting costs and loan-loss provisions.
The net loss was 48 million euros ($64 million) compared with 240 million euros a year earlier, Dusseldorf-based WestLB said in a statement today. Loan-loss provisions fell 61 percent to 95 million euros, while administrative costs dropped 11 percent to 910 million euros.
To get European Union approval for the bailouts from its owners, including the German state of North Rhine Westphalia, and the government, WestLB must sell some assets or transfer them to a so-called bad bank. WestLB’s business with savings banks and medium-sized corporate clients will be taken over by Landesbank Hessen-Thueringen Girozentrale, with the remainder of the lender becoming a service and portfolio management provider.
“The restructuring of WestLB, which was instigated by the European Commission and ultimately endorsed by the owners, will lead to a complete realignment,” Chief Executive Officer Dietrich Voigtlaender said. “An era is coming to an end.”
The bank’s so-called Verbundbank, which will be taken over by Landesbank Hessen-Thueringen by the end of June, will have assets of 40 billion euros and 400 employees. Other WestLB portfolios that have not been divested by that time will be transferred to the bad bank, Erste Abwicklungsanstalt.
The new service and portfolio management provider expects to employ 1,000 people by the end of 2016, WestLB said. Customers will include the Verbundbank and Erste Abwicklungsanstalt, it said.
“As an internationally operating financial services provider, it will comprehensively support the servicing and management of complex portfolios and balance sheet structures,” Voigtlaender said. “The growing market for these specialized services offers considerable potential.”
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