WestLB to seek €10 billion in state aid
AFP · 13 Dec 2008, 17:20
Published: 13 Dec 2008 17:20 GMT+01:00
The paper quoted sources following a meeting of the bank's board on Friday, saying WestLB wanted to dump high risk securities worth €10 billion or more.
Düsseldorf-based WestLB, owned by the northwestern state of North Rhine-Westphalia, said in November it would seek government assistance via the banking sector rescue package, but has not said how much help it needs.
At the same time, the business daily Financial Times Deutschland said WestLB had sold high risk securities to several savings banks that now face "high asset devaluations."
The securities are so-called CDOs, or collateralised debt obligations, which are basically a portfolio of fixed-income assets that were sliced up and sold to investors. CDOs were the category of investments most affected when the US market for high-risk, or subprime, mortgages collapsed in mid-2007.
Several savings banks have filed complaints against WestLB, charging they were poorly advised by the bank which they say sought to pass on the risky investments to others, the newspaper said.
The government bail-out plan offers up to €80 billion ($103 billion) in cash injections and up to €400 billion in guarantees for interbank loans. So far the fund has received 15 requests for assistance and has helped three banks, according to a spokesman.