* BayernLB CET1 ratio 14.4 pct at end-June
* Bank says is well prepared for ECB health check
* Landesbanks seen facing tough ECB scrutiny
* Questions remain on mid-term BayernLB CET1 -Fitch
(Adds chief executive comments, context)
FRANKFURT, Aug 21 German public-sector lender
BayernLB said it was confident of passing European
Central Bank health checks in the coming weeks, as doubts linger
about some other landesbanks.
"For us, neither the asset quality review, nor the stress
tests will have a big effect," BayernLB Chief Executive
Johannes-Joerg Riegler told a conference call on Thursday after
unveiling the lender's results for the first half of the year.
BayernLB's common equity tier 1 (CET1) ratio, a measure of
its financial strength, edged down to 14.4 percent at the end of
June from 14.6 percent at the end of March, compared with an ECB
benchmark of 8 percent.
Germany's landesbanks, which provide wholesale banking
services to the country's 400-strong array of local savings
banks, have worked hard to cut costs and rid themselves of
wobbly assets acquired before the financial crisis.
They have also rejigged their business models to focus on
financing German companies and real estate and improving service
to savings banks.
BayernLB said it was well positioned for the stress tests,
the results of which are due to be unveiled in October and which
have prompted other banks to raise capital.
"We are comfortably positioned, and based on what we know
today, we assume there will be no exigencies of any sort,"
The ECB is expected to take a hard line when reviewing
lenders' exposures to business areas such as shipping loans, an
area where BayernLB's peers HSH Nordbank and NordLB
are seen as vulnerable.
"It's hard to say what the impact will be on the (other)
landesbanks," Riegler said of the tests. "You'll have to ask my
Germany's Voeb banking association, which represents public
sector lenders, has predicted that none of the landesbanks will
encounter problems with the stress tests, pointing out that in
addition to building up capital, the lenders have trimmed their
risk positions by nearly 60 percent.
BayernLB has freed itself of a major worry by selling
loss-making banking subsidiary MKB to the Hungarian government,
although it said on Thursday the sale would push the BayernLB
group to a net loss for the full year.
Credit rating agency Fitch said the sale announced in late
July was a positive step in cleaning up BayernLB's legacy
portfolio but that concerns remained over future capital
"While BayernLB's capitalisation currently ranks favourably
among peers, it is uncertain what level of CET1 ratio BayernLB
will be able to achieve in the medium- to long-term," Fitch said
in a report last week.
(Reporting by Jonathan Gould; Editing by Maria Sheahan and Jane