German public sector banks urged to merge

FRANKFURT – German Finance Minister Peer Steinbrueck urged Germany’s public-sector regional banks on Tuesday to speed up sector-wide consolidation in order to strengthen their global position and help protect them against hostile takeover.

“The Landesbanken (regional state banks) must use the opportunity to combine their strengths now,” Steinbrueck told a banking congress here. As the world’s champion exporter, Germany needed more than just one or two banking heavyweights, the minister argued.And German banks also needed to protect themselves against hostile takeovers, from hedge funds for example.A number of the regional state banks have recently run into financial difficulty.One of the top regional players, WestLB, ran up a loss of more than 600 million euros (816 million dollars) in the first half of this year after bad investments by some of its stock market traders.WestLB’s owners, the regional state authorities of North Rhine-Westphalia and the savings banks associations, are now looking to sell their stake or merge the bank with its counterpart in Baden-Wuerttemberg, LBBW.The east German bank, SachsenLB, was plunged into crisis by faulty investments in bad US mortgage debt and was bailed out with a takeover by LBBW.In the wake of both incidents, the long-discussed process of consolidation among regional state banks has again come under the spotlight.Nampa-AFPAs the world’s champion exporter, Germany needed more than just one or two banking heavyweights, the minister argued.And German banks also needed to protect themselves against hostile takeovers, from hedge funds for example.A number of the regional state banks have recently run into financial difficulty.One of the top regional players, WestLB, ran up a loss of more than 600 million euros (816 million dollars) in the first half of this year after bad investments by some of its stock market traders.WestLB’s owners, the regional state authorities of North Rhine-Westphalia and the savings banks associations, are now looking to sell their stake or merge the bank with its counterpart in Baden-Wuerttemberg, LBBW.The east German bank, SachsenLB, was plunged into crisis by faulty investments in bad US mortgage debt and was bailed out with a takeover by LBBW.In the wake of both incidents, the long-discussed process of consolidation among regional state banks has again come under the spotlight.Nampa-AFP