Germany's crisis-hit BayernLB to axe every fourth job (Roundup)

Dec 1, 2008, 11:47 GMT

Munich - Hard-hit by the global financial crisis, German state-owned bank Bayerische Landesbank said Monday it is planning to axe about every fourth job as it launches a restructuring drive.

The 5,600 job cuts in its workforce of 19,000 are to fall both in the bank's domestic and international operations and are to be rolled out in the years to 2013, BayernLB chief Michael Kemmer said.

The Munich-based bank said in October that was tapping the Federal Government's special 500-billion-euro (645-billion-dollar) bank rescue package to help it limp through the financial crisis. The Bavarian state government is BayernLB's principal owner.

'The BayernLB will be another bank after the restructuring,' said Kemmer with the bank's total business to be slimmed down by about one third.

As part of the changes, Germany's second-biggest state-owned bank will focus on small-to-medium-sized German companies as well as closer cooperation with the nation's regional savings banks.

After a long-running global expansion drive, BayernLB now plans to wind back its international operations make a complete withdraw from Asia, leading to the closure of its offices in Hong Kong, Shanghai, Beijing, Tokyo and Mumbai.

BayernLB's office in Milan is also to be shut down and its operations in New York and London are to be reduced.

After being badly hit first by the fallout from the US subprime mortgage market meltdown, BayernLB's problems grew in the wake of losses caused by the shakeout in Iceland's banking sector.

The BayernLB's announcement in October that it was likely to run up bigger-than-forecast losses of 3 billion euros this year was a factor in the resignation of Bavarian Finance Minister Erwin Huber.

However, the sense of crisis at BayernLB appears to have continued to deepen.

BayernLB is to receive 10 billion euros in extra funds from the state of Bavaria, along with debt guarantees of 15 billion euros from the German government's bank rescue package.