WestLB

WestLB AG was an international regional bank headquartered in Dusseldorf, which was allowed to operate as a credit institution with all banking transactions. Your customer focus was the care and advice of medium-sized and large companies and institutional investors, who accompanied her world. She also acted as the central bank of the savings banks in North Rhine -Westphalia.

WestLB was split on 30 June 2012 in three parts, the legal successor of WestLB AG Portigon was.

• 2.1 Merger and Sale experiments
• 2.2 up a "bad bank"
• 2.3 EU requirements

• 6.1 Members of the Executive Board June 30, 2012
• 6.2 CEO over time

History

Start-up phase from 1832

Predecessor institutions were founded on January 1, 1832 Provincial Hülfskasse Westphalia in Münster and erected on February 7, 1854 Rhenish Provincial Hülfskasse in Cologne, whose headquarters was moved on 10 July 1877 by Cologne to Dusseldorf. There she moved into a used 1896 today building on Friedrichstrasse / Fürstenwall. She was previously on February 17, 1888 a new constitution and called now "State Bank of the Rhine Province ". Your Westphalian counterpart was renamed in 1890 in " Land Bank of the Province of Westphalia ". On 20 June 1914, the Rheinisch- Westfälische Sparkassentag in Cologne decided to use the state bank of the Rhine Province instead of the Cologne Savings Bank as Girozentrale for the savings banks. Through the German banking crisis in 1931 was the largest of the country's banks, Landesbank of the Rhine Province, before the collapse. This had long- term municipal funded by short-term investments of savings banks and was caught in a liquidity crisis in July 1931. She had to stop their payments on August 7, 1931. The coordination of the giro system of savings banks took over a branch of Deutsche Girozentrale in Cologne in August 1931. Support for the Reichsbank with a line of 200 million RM eliminated the liquidity problems of the state bank.

From two Landesbanken the " Rheinische Girozentrale and Provincial Bank" and 1943 the " Landesbank für Westfalen ( Girozentrale ) " emerged in 1935 (after the merger between the National Bank and the Westphalian Pfandbrief Office). The Koblenz branch of the " Rheinische Girozentrale and Provincial Bank" was transferred to the state of Rhineland -Palatinate in April 1958. To the country's banking activities in the country North Rhine -Westphalia - as in other states - to join in a single country bank, established on 1 January 1969 Merger, the "West German Landesbank Girozentrale " (WestLB), which, like the predecessor institutions a public institution had. The merger, she entertained dual headquarters in Dusseldorf and Munster; they also operate offices in Cologne ( Köln WestLB ), Dortmund ( Dortmund WestLB ), Bielefeld and Essen. Your main tasks consisted in the function of a Landesbank as banker to the Land of North Rhine -Westphalia and a Girozentrale with a savings bank Central Bank. Architect Harald Deilmann created in 1969 initially for the main branches, then the strength of domestic offices and foreign branches for some representative, terraced bank building in the corporate design. In Dusseldorf, the banking skyline were created from 1974 to the historic bank building as neighboring buildings; Today they are called " Duke terraces ".

Merger and expansion phase from 1969

Under its first CEO Ludwig Poullain WestLB operational from January 1969, beyond their Landesbank Girozentrale function and expansion policy, opening up new business areas such as industrial credit, industrial holdings and foreign business. The financing of industry had a high priority, since the highly industrialized state of North Rhine -Westphalia was interested in a safe and optimal supply of credit to companies for WestLB. This became WestLB most important economic and industrial polti instrument between the state government, which was represented by their respective finance ministers of the Supervisory Board of the Bank. The acquisition of industrial holdings by WestLB (especially FIELDWORX, Gildemeister AG, Preussag/1974, Ruhr coal AG/1984, Gerresheimer Glashütte/1985, German Babcock/1987, Friedrich Krupp AG/1988, LTU/1989, Horten AG/1990 Hoesch AG/1991, Harpener/1992 ) assured the country indirect influence on key economic sectors and led to a change in location and industrial policy in North Rhine -Westphalia. The Bank supported structural change by fallen into corporate crises based company ( Gildemeister, German Babcock, Gerresheimer Glas or hoarding ) or forced mergers ( Hoesch-Krupp/1993, Thyssen- Krupp, Horten Metro). Between 1985 and 1991, the Bank had its shareholding more than doubled, from 1.75 to 4.36 billion DM There were also failures. In 1977, FIELDWORX AG began a corporate crisis in the 23% -owned WestLB participation, gave her the bank in October 1978 through a capital increase by issuing shares (89 million DM) as well as a guarantee of the Land North Rhine -Westphalia (DM 70 million) and a federal guarantee ( DM 50 million ) additional funding totaling 209 million, which were partially used to repay loans WestLB. This, however, the crisis could not be overcome. Creditors and shareholders remained largely hidden from this crisis. The company went bankrupt in September 1979, the WestLB earned 80 million DM loss. 1974 losses of 270 million DM in this export business was supported by foreign branches - In international business, which accompanied the export / import of the North Rhine -Westphalian middle class emerged previously in forex trading - parallel to the Herstatt Bank and other banks. From 1972, branches or subsidiaries were established abroad, 1972 in Luxembourg, in London in 1973 and 1975 in New York City. 1986, WestLB was represented at 13 locations worldwide: Paris, Zurich, Moscow, Rio de Janeiro, Toronto, Hong Kong, Tokyo, Beijing, Melbourne and Beirut. The bank was thus the largest and most internationally oriented Landesbank in Germany. For other Landesbanken, it evolved into a strategic model, which among other things also thereby was expressed that other Landesbanken recorded the ending " LB " in their names.

Growing Plant Size

The participation of WestLB in LTU enabled the bank a foothold in the tourism sector by the LTU enabled the acquisition of Thomas Cook Group in October 1992. There followed in 1993 a minority stake in the tourism group TUI and in December 1993 to take over the loss-making Köln- Düsseldorf German Rhine River with the aim of a restoration.

In 1995, WestLB was through years of expansive growth policy - measured by total assets - rose to become the third-largest bank in Germany:

• Source: Richard Deeg 1999 Finance Capitalsim Unveiled, 1999, p 82

Ensure that WestLB had reached a farm size, which meant a serious competitor for the large private banks.

An EU directive of December 1989 also forced German banks to increase their capital. In order to maintain the existing business volume, the states had until June 1993 to increase the capital adequacy ratio of their country's banks from 5.6% to 8%. The loss-making state budgets fell from the source, so that the state of North Rhine -Westphalia in December 1991 with the state-owned housing funding (Wfa ) increased bank capital by contribution in kind with a nominal value of DM 24.9 billion and thus WestLB to 2.5 billion DM capitalized. This now had WestLB on a solvency ratio of 8.7 % with an eligible equity of around 2 billion euros, which the Bank was a lending capacity of DM 31 billion.

This practice of non-cash contributions - even in other states - met with growing criticism of the German private banks, saw the herein competitive advantages for the country's banks. Therefore, the Federal Association of German Banks (BdB ) shifted in March 1993, the EU in Brussels, the Competition Commission was only slightly familiar with the specific situation of the German banking system at that time. Below was political pressure, which WestLB gave in and the original interest rate of the contribution increased from 0.6% to 5.5%. In 1995, the theme institutional liability and guarantor liability was picked up by the EU competition commissioner and identified as wettbewerbsverzerrrende State aid; the main test process began in October 1997. decision of 8 July 1999, the Commission considered that the contribution in kind an unlawful State aid, which had to be transferred back.

Conversion of WestLB WestLB AG

Although later told the European Court of Justice this Commission's decision, but at the same time he encouraged the Commission to reach a new and formally correct decision. In addition, at the same time, the European umbrella association of national associations of the private banking sector had filed a complaint with the European Commission that practiced for years guarantor liability for public sector banks was to be regarded as State aid and would be incompatible with European competition law. The Commission concurred with this view. To avoid a long-running legal dispute in both proceedings, out- of-court compromise was reached under the name "Brussels concordance " in July 2001, therefore, was to 2005 generally abolish inter alia, the guarantor's liability. WestLB had now traded and announced in November 2000, the division into the " WestLB AG " as a commercial bank and a promotional bank under the name " NRW.Bank " known. Thus, the commercial bank activities were quite limited form no longer connected with the criticized institutional liability and guarantor liability. In January 2001, the EU Commission of the Federal Government announced that institutional liability and guarantor liability must be assessed as aid.

Subsequently, the West German Landesbank Girozentrale ( WestLB previous ) into Landesbank NRW (now NRW.BANK ) with effect from 30 August 2002, split into the present-day WestLB AG. NRW.BANK operates since as an institution under public law the "public mission activities " for the state of North Rhine -Westphalia (for example, allocation of development loans ). WestLB AG operated in the legal form of the corporation and abolition of the guarantee liability and institutional liability, the so-called competitive business as a commercial bank and as the central bank of the Rhine and Westphalia as. As compensation for the savings banks associations as an essential co-owner of the income stable businesses Landesbausparkasse and investments were removed at the Rheinische and the Westphalian provincial insurance from WestLB and transmitted to it. With the elimination of the development bank activities, the Landesbausparkasse and the Provincial Insurance in August 2002 WestLB stable income ( " cash cows " ) were lost, and trying to balance them with capital market transactions.

Under Sengera investment banking was accelerated from September 2001, which was responsible in particular in the NL London from the U.S. investment banker Robin Saunders. After several successful, large-volume transactions they acquired in 1999, the British electrical appliances landlord BoxClever who received loans totaling DM 1.4 billion later from the bank. Here, the Bank Board was a negative vote of its credit bureaus time. Increasing economic problems meant that the loans had to be classified as "acute impaired" in May 2003. A special audit of the Federal Financial Supervisory Authority ( BaFin) from May 2003 revealed major flaws in the risk management of the bank and an additional provision in the amount of 120 million euros, which led to Sengaras resignation in July 2003. According to opinion of the BaFin, the board members have declined to classical methods of credit checking and so to violate § 18 of the Banking Act. In February 2004, the Bank was a loss of EUR 2.3 billion in the previous fiscal year is known, the largely composed of provisions. The bank had posted a loss BoxClever at 427 million euros, after 2004, a sale to financial investor Fortress Investment Group had succeeded.

In addition, WestLB paid in 2004 as part of a compromise with the Federal Association of German Banks in Wfa litigation compensation in the amount of 1.4 billion euros to the State of North Rhine -Westphalia. In return, the country conducted a capital increase of 1.5 billion euros through at the bank.

Accumulation of risks

In January 2004, Thomas R. Fischer took over as CEO and began a reorganization of the business model. General had Landesbanken after abolition of the guarantee liability difficulties, to develop new markets through its Landesbank Girozentrale and function addition. On one hand, played the role as house bank of the states at the Landesbanken only a minor role, on the other hand they were largely from classical Sparkasse markets back. The country's banks were increasingly international player in universal banks, the industry, international, investment, and later was the capital markets business / investment banking working in. Almost all the country's banks had been involved in the international capital market for U.S. subprime loans, including WestLB. In August 2007, the securities portfolio of the WestLB Group amounted in the U.S. subprime sector to 1.25 billion euros, as the papers were provided even to 98% with at least an A - rating from rating agencies. The following onset of the subprime crisis led to huge loss in value of international banks. Already in January 2008, WestLB had a loss of 1 billion euros announce.

In April 2007, it has surprisingly announced that WestLB with 14% shareholding in DaimlerChrysler was its largest shareholder. But reason was that the shares were only "parked" at the Bank as part of the controversial Divide dens Tripping for others. Just a few days after the bank was able to present a positive result before tax of 1.0 billion euros in 2006, the public on 10 April 2007 was informed of high losses in proprietary trading. Due to the proprietary trading of WestLB emerged from April 2007 loss of 604 million euros. This was due to the failed speculation on exchange rate differences between ordinary and preference shares of the same issuer. In July 2007, Fischer was recalled as a board. Successor in the presidency was Alexander Stuhlmann.

High impact of the financial crisis

In the third quarter report 2007, the Bank reported yet is affordable for charges from the beginning of the global financial crisis in the amount of 355 million euros. The owner then, however, extensive rescue efforts in significantly higher magnitude in February 2008 had to decide. The Bank was divided risky securities worth 23 billion euros in a newly formed special purpose vehicle under the working title "Phoenix" outside the bank. Thus, the Bank of balance sheet burdens, freed from this portfolio. The financing of the SPV was guaranteed by the owner in the amount of 5 billion euros, with the first 2 billion proportionate and going beyond burdens alone by the state of North Rhine -Westphalia would be borne. The EU Commission 's evaluation of this measure as restructuring aid and initiated an investigation. In May 2009, a permit was issued, which was, however, associated with hard restructuring requirements; so WestLB had to give her up to that second headquarters Munster at the end of 2009.

Fiscal year 2007 ended for the bank with a loss of 1.6 billion euros. The bank announced a further reduction of 1,300 and 1,500 employees. In addition, a strict focus was decided at the initial tasks of a regional commercial bank as part of the savings banks organization. End of April 2008 left Alexander Stuhlmann the Bank ( its activity was planned from the outset for one year only ). His successor as CEO was Heinz Hilgert. On 13 December 2008 it was announced after a board meeting that the bank is negotiating with government guarantees the BaFin. On 18 May 2009 Heinz Hilgert resigned from the Board. He justified this surprising for the public and employees step with the lack of support of the owners in the necessary secure the future of the bank.

Search for solutions and splitting

Merger and sales attempts

Like other regional banks, WestLB was involved since the beginning of the financial crisis to a reorganization of the German Landesbank sector. In 2007, there were negotiations with Landesbank Baden -Württemberg and the Landesbank Hessen -Thüringen ( Helaba), both of which were not successful. After a designated as the master plan decision, the "Association head " of the savings banks associations in DSGV of 10 November 2008, the SME business of WestLB a fused from Landesbank Baden- Wuerttemberg and BayernLB bank should be added while the capital market business in a fused from Landesbank Hessen -Thüringen and DekaBank Institute is to be introduced. These talks were inconclusive.

In June 2010, the bank rescue fund commissioned Soffin the former CDU politician and lawyer Friedrich Merz, initiate a sale process of WestLB to a private buyer. In addition, on behalf of WestLB sought the investment bank Morgan Stanley to buyers. Due to the poor economic situation of the WestLB calculated observer is not a sale of WestLB as a whole. In November 2010, discussions with BayernLB have failed. Merz still hoped in April 2011 to have time for a 2011 purchase agreement by the end of August. For criticism in a number of media attended the award high fee for Merz (5000 euros per day) and other lawyers.

Up a "bad bank"

The end of 2009 was the first German bank WestLB, on the basis of new legal possibilities (Financial Market Stabilisation Act ) transferred risky assets in a so-called bad bank with the name " First Abwicklungsanstalt " (EAA ). Securities with a volume of 77 billion euros, together with the Phoenix portfolio for 2008 have been transferred to the balance sheet date, the carrying amount. The EU looked at the process again as unauthorized aid because the evaluation was not done due to the real economic value. The Bank, however, was of the opinion that they have adhered to all the rules.

EU requirements

The EU Commission approved in May 2009, the risk shield for WestLB, however, WestLB had to reduce its balance sheet and risk -weighted assets by 50 %, both at home and abroad close branches and sell investments. The end of 2009, WestLB closes their locations Münster, Bielefeld and Dortmund as a result of EU requirements; Cologne was followed in July 2010. In November 2010, EU Competition Commissioner Joaquin Almunia said that the data transmitted in the bad bank assets were valued too high. The Commission estimated the amount of aid to 3.4 billion euros. In the aid measures in Brussels sees a not attributable to end destruction of taxpayer money and a distortion of competition. The European Commission called for a new reorganization plan with very strict conditions. So should be up to 2011 found a new owner and the balance sheet total was halved until then.

However, the Managing Board of WestLB stressed in the transmission no state aid was paid for it, and took it by appropriate calculations. The EU Commission was concerned that (similar to the Hypo Real Estate ), more and more government aid would need to save the bank from collapse, because they do not have a viable business model. After the failure of merger talks with BayernLB 4 November 2010 commented Competition Commissioner Joaquín Almunia: "The Commission has serious doubts that the current restructuring plan is sufficient to rehabilitate the bank. " On the date of the prescribed by the Commission change of ownership Almunia did not shake ( "Time is running "). The decision should be made as soon as possible.

North Rhine-Westphalia Finance Minister Walter Borjans stressed that a closure of the WestLB will cost billions. On 24 June 2011 it was announced that the owners want to break the bank. This settlement plan, the EU Commission has agreed in December 2011.

Breakdown

On March 22, 2012, a restructuring plan was announced at the press conference, took place in its implementation, the division of WestLB June 30, 2012 in three parts:

• The Portigon AG is the legal successor of WestLB. It has under the Bank no. 100437 as a deposit-taking institution a full banking license and provides services for financial institutions, in particular portfolio management and management, credit analysis, treasury, finance and controlling, risk control, credit administration, IT services as well as various corporate center functions. In accordance with EU requirements, the company must be sold or settled no later than the end of 2016.
• The first EAA (EAA ), which was removed from WestLB in 2009, takes over assets and liabilities and will take care of the loss as possible settlement of "bad " loans and other difficult to sell investments to 2027. It is also colloquially referred to as a bad bank. The subsidiary West Realty has been transferred to the EAA.
• A so-called composite Bank operates under the umbrella of the Frankfurt Helaba continued business with the North Rhine-Westphalian savings banks, SME customers and communities. The 450 employees will keep their jobs in Dusseldorf.

The number of employees should shrink from 4,500 to 1,500 in 2016.

According to the Handelsblatt, the aids of the owners and the federal government in the period 2002-2012 amount to 21 billion euros.

Indicators

Ownership structure

Shareholders of WestLB AG were

• To 30.862 % NRW.Bank, the fully owned by the State of North Rhine -Westphalia since 2011,
• 25.032 % of the Savings Banks and Giro Association ( RSGV )
• 25.032 % of the Savings Banks Association of Westphalia -Lippe ( SVWL )
• 17.766 % of North Rhine -Westphalia.

Board of Directors

Members of the Board June 30, 2012

• Dietrich Voigtländer (Chairman of the Board)
• Hubert Beckmann ( Deputy Chief Executive )
• Thomas Groß
• Werner Taiber

CEO over time