Afternoon:
14°c
Payback threat to German bank
16.09.08
A European Union threat to force troubled German bank WestLB to pay back billions in bailout money could tip it into extinction — and Europe's biggest economy into recession.
EU Commissioner for Competition, Neelie Kroes, said rescue efforts would fail, adding: “You can be sure this restructuring programme isn't going to work. WestLB is running out of time.”
If the bank doesn't significantly improve its restructuring package, she warned, Brussels won't approve the public assistance the EU has already provided. Then, WestLB would have to pay back €12 billion (£9.5 billion).
WestLB — in trouble since the BoxClever TV deal imploded several years ago at a cost of over £500 million — has been hit by the credit crunch, losing €1.6 billion last year.
Its primary shareholders — the state of North-Rhine Westphalia and two regional savings-bank associations — have guaranteed €5 billion of risky investments.
