(Hint: for copy-and-paste, if necessary open in separate browser tab via menu item PRINT)
BayernLB: Chapter 4
The BayernLB had invested €350m with Lehman Brothers. This is now threatened by the Lehman Brothers' insolvency.
The BayernLB applies for €5.4bn out of the Federal government crisis aid fund. Beyond this, the BayernLB is to receive a capital increase of €1bn from its two owners. The projected loss for 2008 is estimated at €3bn. During the first half of 2008, foul US securities brought a loss of €630m. Lately additional losses came from Iceland, the USA and Eastern Europe.
Federal and State governments dispute over which of them should shoulder how much of the €6.4bn crisis aid. [Eulenspargel: the taxpayer does the shouldering in any case]
The financial distress of the BayernLB is growing dramatically: the bank now needs at least €10bn. The newest plan to rescue the bank is in danger. The EU is requested to approve state guarantees for the bank.
The reasons for the worsening of the situation during November is the insolvency of Lehman Brothers back in October. This has since led to further burdens. And €700m - €800m of credits to Iceland are in mortal danger. Added to this, the credit-worthiness of other debtors of the BayernLB is dropping.
In order to spare the state savings banks (one of the two owners of the BayernLB), the government intends to shoulder the €1bn capital increase itself. This reduces the ownership share of the savings banks to 20%. In the medium term, the Bavarian state government plans to guarantee the €10bn all by itself, and the savings banks could withdraw their participation entirely.
5600 of the 19200 jobs at the BayernLB are planned to be cut by 2013. In future, the area of operations of the bank is to be restricted to Bavaria, Germany and selected areas of Europe. The foreign and the investment operations are planned to be reduced radically.
The operative loss in the first quarter rose to €1.7bn. Additionally to the €10bn fresh capital
, the Federal and state governments have agreed on €21bn in guarantees
The court of justice has rehabilitated the previously dismissed Board member Dieter Burgmer [-> Chapter 1: the "bagatelle dismissal"]. The manager is currently contending the payment of his salary until September 2012, when his term of office would formally have ended.
Commentary: "Staccato of financial injections"
The Federal government banking rescue program amounts to a gigantic €480bn. But in order that things do not become overly transparent, further sources exist: the State governments are also pumping money into their state banks. And it becomes still more complicated: Some billions flow directly to the banks as capital injections, while others represent guarantees that are in the long run supposed to
cost the taxpayer nothing. Nobody can forecast whether this will really be the case.
The sums are altogether unbelievably high, the processes enormously technical, the results quite uncertain, and the whole proceedings are becoming less transparent day by day. The staccato of financial injections overstrains the man on the street, who cannot these sums to his daily experience. The endless refrain of billions here and billions there lulls people to sleep, deafens them, so that they lose any sense for what is happening.
An example: The €10bn, that are intended for the BayernLB correspond to the annual costs of two million Kindergarten places i.e. for two thirds of all such places across Germany. This is general - the sums that are being swallowed by the banks are missing elsewhere, whether in child care, or for economic stimuli, or whatever - and they burden future generations with an enormous state debt. Because the aid to banks takes place largely hidden from the public view, no detailed discussion comes up about what is actually being done with this money.
The BayernLB actual losses for 2008 turn out to be much higher than predicted last October, namely €5bn.
In the meantime the state of Bavaria owns 94% of the BayernLB (cf. Chapter 3 where a complete withdrawal was the option of the day)