June 10, 2012 / 3:25 PM / in 6 years

German landesbanks unlikely to merge -CEO in paper

FRANKFURT, June 10 (Reuters) - A consolidation of German landesbanks is unlikely in the foreseeable future, according to the head of Norddeutsche Landesbank (NordLB).

Currently there are “no valid merger scenarios”, Gunter Dunkel told German financial daily Handelsblatt in an excerpt of an article in Monday’s edition.

Even if the new business models of the seven independent landesbanks prove to be sustainable, he said “mergers were extremely difficult and rarely successful”.

Many landesbanks required bailouts during the financial crisis, since the regional state-owned lenders often engaged in highly risky businesses with the tacit permission of local politicians on the board.

For that reason, they are often compared to Germany’s version of Cajas, the troubled Spanish savings banks that are behind Madrid’s request for a European bailout.

Reporting by Christiaan Hetzner; Editing by Jon Loades-Carter

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