Irish division of troubled German bank is facing sell-off or closure
Published 06/06/2011 | 05:00
THE Dublin subsidiary of Germany's fourth-largest bank, Landesbank Baden-Wurttemberg (LBBW), may be sold or closed within months, the bank announced in its company results.
LBBW Asset Management (Ireland), an IFSC-based investment vehicle of Landesbank Baden-Wurttemberg, may be sold by the end of the month or closed at some point in the future, according to the recently filed results.
A note on the subsidiary website read: "LBBW Asset Management (Ireland) plc is in the process of re-organising its business in Ireland. The website will be updated soon to reflect this change of business focus."
The sale or closure of LBBW Asset Management (Ireland) would mark an end to turbulent few years for the subsidiary of one of Germany's largest and most troubled regional banks.
Gardai raided the offices of German bank SachsenLB three years ago as part of a much larger German police investigation into how SachsenLB nearly collapsed on the back of investments made at its Irish operations.
SachsenLB was folded into Landesbank Baden-Wurttemberg for a knock-down price after running into multi-billion euro liquidity problems which forced German banks to come up with a €17bn rescue package.
LBBW Asset Management (Ireland) said in its latest results that it paid a dividend of €25m to its German parent last year, more than four times the dividend paid in the previous year. The was the main reason for profits at the subsidiary slipping to €18.3m from €36.6m the previous year.
The unit paid out €4.5m in wage and pension costs, almost exactly the same as the previous year.
The parent bank, Landesbank Baden-Wurttemberg, which is based in the wealthy region of the same name, has struggled due to risky investments in US property before the crash.
Losses narrowed last year to €317m from €1.21bn the previous year as the bank sold off risky investments and tried to reduce its exposure to bad loans.
The German company announced earlier this month that it plans to sell off 40,000 flats and houses to bolster its balance sheets.