(Hint: for copy-and-paste, if necessary open in separate browser tab via menu item PRINT)
BayernLB: Chapter 2
Eastern Europe appeared to politicians like a second Klondike: rapid expansion, promise of large earnings. For €1.6bn the BayernLB bought a majority stake of the Austrian Bank Hypo Group Alpe Adria (HGAA) that operates across half of the Balkans. The purchase includes the HGAA Liechtenstein subsidiary: the Hypo Group Alpe Adria. The HGAA is the house bank of the far right-wing premier of the Austrian State Carinthia: Jörg Haider.
Board member Dieter Burgmer introduces „Value Investing“ as part of the BayernLB strategy
In a hedge against Altana stock the BayernLB lost €44.6m. A bank speaker: "Problems came up in a stock exchange operation". Dieter Burgmer and three other employees were immediately dismissed.
The US mortgage crisis is starting to be felt in the international banking world. Banks, many without expertize in the real estate sector have been speculating over months with securitized US mortgages, and recently the frequency of defaults was growing. Prominent among these banks (in Germany): IKB, and state banks such as WestLB, BayernLB.
According to the Financial Times, german state banks have invested over €90bn in SIVs. It is becoming ever more difficult to find capital on the international market. In a reaction to large losses of the IKB, the Bundesbank (Central Bank) president stated that it was purely an IKB problem. The CEO of the WestLB (NorthRhine-Westphalia), however, was of the opinion that the US mortgage crisis could endanger the entire
german banking sector.
Meantime, the next state bank in line, the SachsenLB (Saxony), reported losses of €17.3bn, that had to be compensated by the savings bank union in Saxony.
The BayernLB acknowledged only to being active in critical markets, and refused to divulge the operational volume.
For the first time, the BayernLB admitted to an investment of €1.9bn in the US subprime (ramshackle) segment, but stressed having sufficient liquidity.
The BayernLB currently runs three conduits: two for the US operations (each of €10bn), and one for Europe (of €6bn).
The crisis of the mortgage bank Northern Rock has caused a panic amongst UK savers.