Cross-border expansion, privatisation and consolidation are likely to change the face of the German Landesbanken scene. Jan F Wagner, in Frankfurt, talks to three Landesbank chiefs about plans for the future.
Read the financial press in Germany these days and the most exciting banking story is about the Landesbanken: the seven remaining state-owned wholesale banks of which WestLB is best known. Two years after the loss of their state guarantees and hence, top credit ratings, Germany’s Landesbanken face the kind of activity that gets bankers’ adrenaline flowing: hot merger speculation, initial public offerings (IPOs), expansions and, in a first for the sector, privatisation.
The merger speculation is being driven by Siegfried Jaschinski, chief executive of Landesbank Baden-Württemberg (LBBW), the largest of the group. Convinced that his bank can form the basis for a new “national champion”, Mr Jaschinski has held merger talks with four peers, including Nord/LB and WestLB. WestLB is particularly attractive to LBBW because of its investment banking arms in London and New York.
The government of North Rhine Westphalia wants to sell its 38% stake in WestLB and has met with LBBW to discuss the matter. And, although this might not sit well with WestLB CEO Thomas Fischer, he has been weakened by the bank’s recent loss of E300m on equity trades. WestLB will struggle to stay profitable this year and Mr Fischer could be on the way out.
HSH Nordbank, a Landesbank that is the world’s biggest shipping financier, is preparing for an IPO that will permit the local governments of Hamburg and Schleswig-Holstein to reduce their stakes. Its privatisation began last year when a consortium led by US private equity firm JC Flowers & Co acquired a 26% stake.
Except for rebuffing LBBW’s merger efforts, Nord/LB has kept out of the frenetic activity. Instead it is focusing on expansion in Scandinavia and eastern Europe. To that end, it has formed a retail venture with Norwegian giant DnB Nor and is discussing ways to broaden that relationship.
Whatever happens, it is clear that the Landesbanken sector will change fundamentally – and perhaps quicker than anyone expects. Three bankers take centre stage: LBBW’s Mr Jaschinski, Nord/LB management board chairman Hannes Rehm and HSH Nordbank CEO Hans Berger. Here, The Banker profiles the three men.
Siegfried Jaschinski, CEO of LBBW
