Stricken German bank expected to be sold this weekend
FRANKFURT (Reuters) - Stricken German state lender SachsenLB is expected to be sold this weekend to another German state bank, Horst Metz, the finance minister of Saxony, said on Saturday.
"We are in talks with the Landesbanks. We agree that the talks will continue and that they will be brought to a successful conclusion. We assume that we will find a good solution this weekend," he told reporters after a special cabinet meeting.
Metz also said that Stuttgart-based LBBW, Germany's biggest Landesbank LBBW.UL and already tipped as a favorite, was among the parties in the talks. A source close to the company said owners of LBBW would be meeting on Sunday, without giving any more details.
LBBW was the only remaining bidder, a source close to the company contacted by Reuters later said, but did not comment on a likely price.
German newspaper Welt am Sonntag said it had information that the purchase price would be 300 million euros, citing a source close to the company. It also said that SachsenLB had immediate obligations of 250 million euros which the new buyer would have to pay in cash.
The eastern state of Saxony and local community savings banks own SachsenLB, the second German casualty after the subprime mortgage crisis led to difficulties in world credit markets.
Last week a group of state banks said they would rescue the bank. In return for a 17 billion euro ($23.1 billion) credit line to keep it afloat, the owners were forced into agreeing to its sale, a milestone in Germany, where few state-owned banks are ever put up for auction.
Germany has taken the brunt of the European fallout so far from problems stemming from subprime home loans as two of the country's banks have almost collapsed, requiring high-profile industry bailouts.
This prompted calls for the reform of financial market supervision. The economy minister of the southern state of Bavaria, Erwin Huber, said on Friday that supervision needed tightening.
In an interview with the web edition of Financial Times Deutschland, Huber said that the roles of the Bundesbank and financial watchdog BaFin needed to be better defined.
"The insufficient demarcation of competencies does not exactly contribute to the efficiency of financial supervision," said Huber, who is favorite to succeed Edmund Stoiber, the leader of Bavaria's Christian Social Union party.
A spokeswoman for BaFin said SachsenLB's Irish subsidiary had already been investigated in 2005 and problems with its risk exposure had been found.
Confirming a report in Der Spiegel magazine, she said BaFin had asked the Dublin subsidiary at the time to make changes.
German daily Berliner Zeitung reported on Saturday that SachsenLB Chief Executive Herbert Suess was close to being replaced. A spokesman for Sachsen LB declined to comment on the report.
On Thursday, SachsenLB's board member in charge of its capital markets business, Stefan Leusder, stepped down.
