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BayernLB to seek bailout for euro10 billion

BayernLB to seek bailout for euro10 billion

Germany's troubled BayernLB bank, which became the first to request help from a government bailout plan, has seen its need for fresh capital climb to euro10 billion ($12.9 billion), officials said Friday.
Officials in Bavaria, whose state government owns half the bank, last month presented plans to seek an injection of euro6.4 billion.
However, rising credit risks and new write-downs mean BayernLB now needs a total of euro10 billion, said Adelheid Rupp, the deputy head of a state parliament committee that oversees the bank.
Rupp said plans now call for the Bavarian government to provide euro7 billion of the fresh capital, with the federal bailout fund contributing euro3 billion in a "silent investment" _ one that would give it a relatively small say in running the bank.
Bavarian Governor Horst Seehofer said the bank also needs lending guarantees to the tune of euro20 billion. He said it would seek euro15 billion in interbank lending guarantees under the federal plan.
BayernLB and other public-sector wholesale banks have faced hefty write-downs as a result of the subprime lending and credit crisis. BayernLB's situation has been worsened by losses due to bank failures in Iceland.
Municipally-backed local banks currently own the other half of BayernLB. Rupp said they would not contribute to the rescue plan and would see their ownership share diminish to less than 20 percent.
The German government's rescue plan is worth up to euro500 billion ($645 billion) in total.


Updated : 2021-10-19 17:51 GMT+08:00