Posted on 08/26/2007 4:43:23 PM PDT by DeaconBenjamin
PARIS: The eastern German state of Saxony abruptly sold a troubled state-run bank Sunday as the global liquidity crunch sparked by the U.S. subprime mortgage crisis claimed its first major European victim.
Landesbank Sachsen Girozentrale, which received an emergency €17.3 billion, or $23.6 billion, line of credit from a group of regional savings banks on Aug. 17, is being sold to a larger rival, Landesbank Baden-Württemberg, said the Saxony state premier, Georg Milbradt. The state government controls 51 percent of the bank, which is known as SachsenLB and is based in Leipzig.
"As a result of the market turbulence and the resulting pressure on the bank, continuing its activities without a partner would not be feasible," Milbradt said Sunday in Dresden.
The swift sale of SachsenLB was the most dramatic sign yet of just how difficult it has become for many European lenders, particularly in Germany, to gain access to short-term financing amid widespread uncertainty over the extent of banks' investments in the souring mortgage-backed securities market.
The state premier of Baden-Württemberg, Günther Oettinger, announced late Sunday that Landesbank Baden-Württemberg, or LBBW, would pay an initial €250 million for SachsenLB.
He added that Saxony and SachsenLB's other owners - local savings banks and municipal authorities - would transfer their holdings to LBBW, which is based in Stuttgart. The value of the holdings would be established at the end of this year, and SachsenLB would be folded into LBBW as a subsidiary at the beginning of 2008, Oettinger said, according to The Associated Press.
(Excerpt) Read more at iht.com ...
As usual, it’s the Americans fault.
As usual, it’s a state run enterprise that’s in trouble.
What’s the answer to this conundrum? Why of course, more subsidies!
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