Westdeutsche Landesbank Girozentrale

views updated May 14 2018

Westdeutsche Landesbank Girozentrale

D-40217 Düsseldorf
Herzogstrasse 15
Germany
Telephone: (49) (211) 826-01
Fax: (49) (211) 826-6119
Web site: http://www.westlb.com

State Owned Company
Incorporated: 1969 as Westdeutsche Landesbank Girozentrale
Employees: 11,390
Total Assets: EUR 400 billion ($374 billion) (2000)
NAIC: 52211 Commercial Banking

Westdeutsche Landesbank Girozentrale—WestLB for short—is a major force in the German economy and a strong competitor of the Big Three German banks. WestLB is the central bank of West Germany’s most populous region, North Rhine-Westphalia, the clearing bank for the Sparkassen or savings associations in the states of North Rhine-Westphalia and Brandenburg, and a specialist wholesale bank with offices in 35 countries around the globe. The bank provides a full range of financial services such as project and real estate financing, investment banking, and electronic banking to corporate and public sector clients as well as institutional and private investors. The State of North Rhine-Westphalia owns roughly 43 percent of WestLB. Another combined stake of about 28 percent is held by regional savings associations and municipalities. WestLB’s strength is in part the result of its structure—joint ownership between the state government, regional banks, and local authorities—a structure that can be traced to its origins in two seventeenth-century provincial banks.

1832–1969: From Assistance Bank to State Bank

In 1818, the Swedish government stunned Europe by offering 160,000 taler to the German province of Westphalia as reparation for the damages incurred when Swedish and Dutch soldiers marched through the province during the Napoleonic Wars. This money was decreed the property of all Westphalia by its president, Freiherr von Vincke. The funds were used to develop the region’s economy and pay for public-works projects, but some formal policies were needed to distribute the money. In 1832, the Westphalian Provinzialbank-Hulfskasse was founded to accomplish this task. The bank was the first hilfskasse, or assistance bank, in Prussia and played a pivotal role in developing the region’s economic potential throughout the 19th century.

Frederick William IV, the king of Prussia, was impressed by the advantages the hilfskasse offered Westphalia and ordered that a similar bank be created in the Rhineland in 1847. Its government, influenced by the economic success of the Aachener Union already in business within the province, founded the Provinzial-Hülfskasse of the Rhineland in 1854.

The two banks were instrumental in making the Rhine-Westphalia region one of the biggest and most productive industrial areas in Europe by the time World War I began. Both banks had become landesbanks before the end of 19th century, which greatly increased their range of services, since hilfskasse banks had more restricted charters. Their new names were Landesbank für Westfalen Girozentrale, Münster, and Rheinsche Girozentrale und Provinzialbank, Düsseldorf.

Both landesbanks endured the boom-bust economic cycle of Germany during the military buildup of the World War I years, the hyperinflation of the Weimer Republic, the second buildup as the Nazis assumed power in 1933, and the economic chaos of the immediate postwar years. Finally, with the Marshall Plan and the currency reforms of 1948, Germany’s postwar recovery began. At about this time both banks expanded their services to include clearing transactions for savings banks, thus adding the generic term girozentrale to their names. With the economic miracle of the 1950s, there was talk of combining the two landesbank girozentrale institutions, since the North Rhine and Westphalia provinces had become politically unified under the British occupation. For political reasons, however, this merger was not feasible until the late 1960s.

On January 1,1969 the two local banks were combined at last, ostensibly to fight the economic domination of the Big Three banks—Deutsche Bank, Dresdner Bank, and Commerzbank. The new institution, based in one of Germany’s most populous and wealthy states, could hope to rival the leading international banks and pose a challenge to the Big Three, which exercised overwhelming economic control over West Germany and showed relative insensitivity to regional needs, especially for capital for the large export industries in the region.

Thus, the Landesbank für Westfalen Girozentrale, Münster, and the Rheinsche Girozentrale und Provinzialbank, Düsseldorf, became a new entity, the Westdeutsche Landesbank Girozentrale, and Ludwig Poullain was named chairman of the management board. He committed the bank to a policy of growth and expansion that would enable it to challenge, and occasionally surpass, the Big Three banks in total assets.

The 1970s: Outside Expansion and In-House Trouble

During its first few years, WestLB prospered. Because of its unusual flexibility, the bank could, for instance, offer tailor-made long-term loans to customers. Also, because of the increased capital which WestLB controlled, its commercial-loan operations expanded to include larger companies, which meant larger loans and greater profits.

In 1970, WestLB made international news by joining the Chase Manhattan Bank and two other banks in starting up Orion Bank Ltd., an international merchant bank. The bank, in which WestLB held a minority interest, had an initial capitalization of $24 million.

In 1973, WestLB made news when it posted more than $150 million in foreign-exchange losses, the result of unauthorized speculative trading by employees who were subsequently fired.

During the mid-1970s, WestLB did indeed reach its goal of joining the Big Three banks, becoming Germany’s third-largest lending institution in 1976. That year, WestLB proposed a merger with the troubled Hessische Landesbank. The resulting firm would have been Europe’s largest bank, but the merger eventually fell through for political reasons.

Moreover, a drawn out scandal soon began to tarnish the bank’s image. It began when Ludwig Poullain, the bank’s founding chairman, announced his resignation in December 1977, claiming that his chairmanship was untenable. The WestLB supervisory board refused his resignation and fired him for “gross neglect of his duties.” Poullain successfully sued to force the bank to pay his remaining contractual wages of $230,000 a year for six years. Over the next several years, Poullain was charged with bribery, fraud, and malfeasance regarding a $465,000 consulting fee he received from Josef Schmidt, a financial broker who himself was charged with embezzlement, tax evasion, breach of trust, and criminal bankruptcy.

Poullain had not fully disclosed to WestLB management the terms of the consulting fee that Schmidt gave him, nor had he informed WestLB that he granted Schmidt a loan for the coincidental sum of $465,000 and neglected to tell the WestLB management board that Schmidt was under investigative arrest when it granted him another loan for $930,000, again at the behest of Poullain himself. Poullain later claimed that the charges against him were politically motivated because his steering the bank into an international presence had allegedly upset some state politicians. In 1981 he was found not guilty of the charges.

The 1980s: Heightened International Focus Under New Leadership

In 1980, the bank reported that it had made huge profits in foreign currency for 1979. Even so, total earnings were down by almost 68 percent and the bank stopped paying dividends until 1986.

Profits were down by two-thirds for fiscal 1980, and some called for the resignation of Johannes Völling, who had replaced Poullain. WestLB was suffering from a rise in interest rates. The bank was forced to finance fixed-rate long-term loans with higher-cost short-term funds. Since WestLB was North Rhine-Westphalia’s central bank and the clearing bank for the area’s 159 savings associations, any dip in WestLB’s profits affected the region.

Eventually Völling did resign, in July 1981, stating that the bank’s low profits had eroded confidence in his ability. Friedel Neuber, formerly head of the Rhineland Federation of Savings Banks, was appointed the new chairman. Neuber’s appointment drew criticism, as he had never worked at a bank. However, he would head WestLB for the next 20 years. Neuber’s priorities were to restructure, review operations for profitability, and expand the bank’s international business.

In late 1981, WestLB sold its stakes in two industrial companies, Philipp Holzmann and Preussag, raising some DM 700 million, part of it to cover anticipated losses for the year. In mid-1982, WestLB raised DM 1.12 billion in new capital from its shareholders; the North Rhine-Westphalia state government contributed the most, raising its stake in the bank to 43 percent. This increase was designed to provide WestLB with capital for future growth and to help mitigate the higher degree of risk involved in its loans to Third World countries. WestLB began to strengthen its loan-loss reserves following Mexico’s suspension of debt payments in August 1981; by 1988, its reserves covered more than 50 percent of its exposure. These measures soon paid off; WestLB’s earnings rose sharply in 1982—enough to allow it to repurchase a 35 percent stake in Preussag.

Company Perspectives:

On the strategic front, as a commercial bank WestLB AG will be in a better position to fulfill growing competitive and profitability requirements. The legal status of a joint-stock company and the related structures under German Stock Corporation Law will make the commercial bank transparent and understandable to international clients, investors, and employees in the long term. This will support the strategic focusing of the bank as a leading European wholesale bank and open up several options with regard to capital procurement and strategic partnerships. Independent status will also help to create a clear market profile. In addition, there will be a strategic refocusing of the bank’s business activities. WestLB AG will expand business segments such as Special Finance and Equity Investments, in which WestLB has widely accepted expertise. On the other hand, the bank will discontinue some other businesses, for example Private Banking, where a wholesale bank has only limited scope for expansion.

In 1984, WestLB, along with four other German banks, combined forces to create a new venture-capital company. The same year at least one top credit official on the management board resigned because of his role in the bank’s involvement with Deutsche Anlagen Leasing GmbH, a lending concern that lost huge amounts of money due to over-extension, weak management controls, and devaluation of its assets. Nevertheless, WestLB again experienced high earnings in 1986 and that year was able to resume the payment of dividends.

In 1985 and 1986, WestLB increased its international business, as Neuber had long planned. In 1985, Owens-Illinois Inc. sold a 58 percent share of Gerresheimer Glas AG to the bank, which syndicated the glass manufacturer for other German investors. In 1986, WestLB dramatically heightened its international profile by taking part in an arrangement with the Japanese to sell securities on the Tokyo exchange. In exchange for access to the deutsche mark bond market in Europe, the Japanese allowed WestLB and three other large German banks to deal securities under certain limited circumstances.

This strong international position allowed WestLB to lead a banking syndicate that bought a one-fourth share in the Deutsche Babcock AG engineering group from the government of Iran in 1987. The bank again profited from selling the shares to institutional investors after syndicating its interest in the acquired firm.

As part of the improvement of economic and political relations between Eastern and Western Europe, in May 1988 WestLB joined most of the other major German banks in offering sizable loans to the Soviet Union. WestLB also played a historic role in furthering open trade when a Swiss subsidiary of the bank brought to market Moscow’s first foreign bond issuance since the 1917 revolution, a formal acknowledgment of the close economic ties that existed between the two countries.

WestLB also revived its plan to merge with Hessische Landesbank. Though the proposed merger caused much excitement, the plan fell through in December 1988 when the state of Hessen, Hessische’s home region, decided to sell its 50 percent stake in Hessische to the Hessen savings banks, which disapproved of the proposal.

The 1990s: Tourism and Other Expansion Projects

By the beginning of the 1990s, WestLB had become the fourth-largest West German bank in total assets. The following decade was characterized by the liberalization of the European and global financial markets, which brought about growing competition, intensified consolidation, and the rising influence of the European Union’s legislation on German law. The reunification of the two German states in 1990 opened up new growth opportunities for WestLB. The bank helped establish Deutsche Industrie- und Handelsbank (DIHB), a new bank for corporate clients from the eastern German states, became the central clearing bank for the Sparkassen in Brandenburg, the state surrounding Berlin, and acquired a 50 percent stake in Investitionsbank Brandenburg.

Looking for lucrative growth markets, WestLB turned to tourism and helped carry out a remarkable coup that would change Germany’s tourism landscape forever. The bank’s major industrial shareholding, Preussag, was struggling with competitive pressures and the cyclical nature of the steel market. WestLB helped Preussag with its complete turnaround from the second largest German steelmaker to Europe’s leading tourism empire. In 1992, the bank acquired Thomas Cook, a leading British tourism group, in which it already owned a 10 percent stake. In the same year a consortium lead by WestLB bought a majority share in Kahn KG, which in turn held a 40 percent stake in Touristik Union International (TUI), Germany’s largest tour operator. In January 1993, WestLB established its new tourism holding company, TCT Touristik Beteiligungs GmbH & Co. KG. When it became apparent that WestLB was about to dominate TUI, the other TUI shareholders resisted fiercely. However, later in the year TUI’s shares were redistributed. German charter airline LTU, another one of WestLB’s major shareholdings, and German logistics concern Hapag Lloyd AG, held each 30 percent in TUI. When Hapag Lloyd AG went up for sale in 1997, WestLB helped Preussag acquire the company in a DM 2.8 billion deal. After the takeover, WestLB transferred LTU’s 30 percent share in TUI to Preussag. With a 60 percent stake in TUI, Preussag announced that tourism would become its new major focus. The deal passed the German cartel authorities when WestLB agreed to sell its interest in LTU. Finally, in 2000, Preussag succeeded in a friendly takeover of the largest British tourism group, Thomson Travel Group plc. after WestLB had agreed to the EU Commission’s requirement to sell its stake in Thomas Cook Holdings Ltd. The “new” Preussag—with the help of WestLB—had become a leading shipping company and Europe’s number one tourism group.

In an effort to enhance its business, WestLB invested heavily in its national and international infrastructure during the 1990s, expanded its portfolio of shareholdings, and focused on special project financing. The company, together with bank partners, founded the mortgage bank Immobilienbank, based in Mainz, and security bank Wertpapierservice-Bank in Frankfurt. The British Standard Chartered Bank, West Merchant Bank, and brokerage firm Panmure Gordon were among WestLB’s international acquisitions. In 1995, WestLB received banking licenses for doing business in Poland and Russia. By that time, international business accounted for roughly one-third of the bank’s total revenues. Besides central and eastern Europe, WestLB strengthened its foothold in Asia.

Key Dates:

1832:: Westphalian Provinzialbank-Hülfskasse is founded.
1969:: Westdeutsche Landesbank Girozentrale is established.
1981:: Friedel Neuber becomes WestLB chairman.
1995:: WestLB receives banking licenses for Poland and Russia.
2001:: The German government agrees to revoke the special status of state-owned banks; WestLB’s shareholders agree to transform the bank into a public stock company.

In the second half of the decade, WestLB experienced growing difficulties. Contrary to the increasing risk the bank carried, WestLB’s financial reserves declined. Margins in the lending business shrunk while administrative cost rose. The bank had to swallow losses in the billions in connection with the Asian financial crisis and some risky adventures in Russia. Investments were necessary to prepare for the advent of the new European currency. All those factors caused profits to grow much slower than revenues. On top of that, German tax authorities started investigating WestLB for transferring billions of deutsche marks out of the country to avoid taxes.

1999 and Beyond: Unexpected Reorganization

In the late 1990s, WestLB, according to American Banker the twentieth largest bank in the world, worked on refocusing its strategy to concentrate on core competencies when an earlier business transaction with the state North Rhine-Westphalia took on a life of its own. In 1992, to meet the European Union’s higher requirements for capital assets for banks, the state had transferred its residential construction support arm Wohnungsbauförderanstalt (WFA) to WestLB. The transaction boosted WestLB’s capital base by DM 4 billion that the state did not have to pay out of its budget. However, the Bundesverband Deutscher Banken, the trade association of German banks, filed a complaint with the EU, claiming that the transaction had given WestLB an unfair advantage. In 1999, the EU ruled that WestLB had to pay North Rhine-Westphalia EUR808 million in interest on the deal for the period from 1992 until 1998. This sum equaled the interest a commercial lender would have charged, but which WestLB had not been charged by the state. WestLB appealed the ruling and in early 2002 the case was still pending.

Besides the WFA deal, WestLB was affected by the fact that the EU was not willing to further tolerate the special status of German state-owned banks. By law, state-owned banks were provided with state guarantees for their liabilities. At the same time, these banks competed with commercial banks that could not rely on such financial backup. In 2001, the German government agreed to revoke the special status of state-owned banks by 2005.

In December 2001, WestLB’s shareholders approved a new corporate structure for the bank. WestLB’s commercial activities, which accounted for about 80 percent of the bank’s business, were to be spun off as WestLB AG, a public stock company that competed in the financial markets, in the second half of 2002. The state-owned parent company was to be renamed Landesbank NRW and to take on all public-interest activities.

Jürgen Sengera, ex-gatekeeper of the German national handball team and longtime member of the bank’s management board, succeeded Friedel Neuber in September 2001 as WestLB chairman. To get the bank ready for a new chapter in its history, he planned to hire new top managers, reorganize WestLB’s operations which had become more costly and less profitable, radically cut down the number of the bank’s sales offices and shareholdings, and focus on investment banking and international trade and special project financing. He also planned to discontinue private banking services.

Principal Subsidiaries

WestLB Europa Holding AG; WPS WertpapierService Bank AG (99.97%); Westdeutsche Spielbanken GmbH & Co. KG; WestLB UK Ltd.; West Merchant Bank Ltd. (United Kingdom); Westdeutsche Landesbank (France) S.A.; Banque d’Orsay S.A. (France); Westdeutsche Landesbank (Ireland) plc; Westdeutsche Landesbank (Italia) S.p.A.; Banque Européenne pour l’Amérique Latine (BEAL) S.A. (Belgium); WestLB International S.A. (Luxembourg; 75%); WestLB New York Capital Investment Ltd. (United States); Criterion Investment Management LLC (United States); WestLB Asset Management (USA) LLC; Westdeutsche Landesbank Polska S.A. (Poland); SAO Westdeutsche Landesbank Vostok (Russia); Westdeutsche Landesbank (Hungaria) Rt. (99.99%); WestLB Asia Pacific Ltd. (Singapore); WestLB Asset Management (Japan) Co. Ltd.; WestLB Asset Management (Australia) Pty. Ltd. (51%).

Principal Competitors

Commerzbank AG; Deutsche Bank AG; Dresdner Bank AG.

Westdeutsche Landesbank Girozentrale

views updated Jun 08 2018

Westdeutsche Landesbank Girozentrale

4000 Dusseldorf
Herzogstrasse 15
Federal Republic of Germany
(211) 826-01

State Owned
Incorporated: 1969
Employees: 9,996
Assets: DM92.1 billion

Westdeutsche Landesbank Girozentrale is the central bank of West Germany’s most populous region, North Rhine-Westphalia, and the clearing bank for its 250 savings associations. Because of this, it is a major force in the German economy and a strong competitor of the Big Three German banks. Its strength is in part the result of its structure—joint ownership between the state government, regional banks, and local authorities—a structure that can be traced to its origins in two 17th-century provincial banks.

In 1818 the Swedish government stunned Europe by offering 160,000 taler to the German province of Westphalia as reparation for the damages incurred when Swedish and Dutch soldiers marched through the province during the Napoleonic Wars. This money was decreed the property of all Westphalia by its president, Freiherr von Vincke. The funds were used to develop the region’s economy and pay for public-works projects, but some formal policies were needed to distribute the money. In 1832 the Westphalian Provinzialbank-Hülfskasse was founded to accomplish this task. The bank was the first hilfskasse, or assistance bank, in Prussia and played a pivotal role in developing the region’s economic potential throughout the 19th century.

The two banks were instrumental in making the Rhine-Westphalia region one of the biggest and most productive industrial areas in Europe by the time World War I began. Both banks became landesbanks before the end of 19th century, which greatly increased their range of services, since hilfskasse banks had more restricted charters. Their new names were Landesbank fur Westfalen Girozentrale, Munster and Rheinsche Girozentrale und Provinzialbank, Düsseldorf.

Thus the Landesbank für Westfalen Girozentrale, Munster and the Rheinsche Girozentrale und Provinzialbank, Düsseldorf, became a new entity, the Westdeutsche Landesbank Girozentrale, and Ludwig Poullain was named chairman of the management board. He committed the bank to a policy of growth and expansion that would enable it to challenge, and occasionally surpass, the Big Three banks in total assets.

On January 1, 1969 the two local banks were combined at last, ostensibly to fight the economic domination of the Big Three banks—Deutsche Bank, Dresdner Bank, and Commerzbank. The new institution, based in one of Germany’s most populous and wealthy states, could hope to rival the leading international banks and pose a challenge to the Big Three, which exercised overwhelming economic control over West Germany and showed relative insensitivity to regional needs, especially for capital for the large export industries in the region.

During its first few years WestLB prospered. Because of its unusual flexibility, the bank could, for instance, offer tailor-made long-term loans to customers. Also, because of the increased capital which WestLB controlled, its commercial-loan operations expanded to include larger companies, which meant larger loans and greater profits.

In 1970 WestLB made international news by joining the Chase Manhattan Bank and two other banks in starting up Orion Bank Ltd., an international merchant bank. The bank, in which WestLB held a minority interest, had an initial capitalization of US$24 million.

In 1973 WestLB made news when it posted more than US$150 million in foreign-exchange losses, the result of unauthorized speculative trading by employees who were subsequently fired.

During the mid-1970s WestLB did indeed reach its goal of joining the Big Three banks, becoming Germany’s third-largest lending institution in 1976. That year WestLB proposed a merger with the troubled Hessische Landesbank. The resulting firm would have been Europe’s largest bank, but the merger eventually fell through for political reasons. But a drawn out scandal soon began to tarnish the bank’s image. It began when Ludwig Poullain, the bank’s founding chairman, announced his resignation in December, 1977, claiming that his chairmanship was untenable. The WestLB supervisory board refused his resignation and fired him for “gross neglect of his duties.” Poullain successfully sued to force the bank to pay his remaining contractual wages of US$230,000 a year for six years.

Over the next several years Poullain was charged with bribery, fraud, and malfeasance regarding a US$465,000 consulting fee he received from Josef Schmidt, a financial broker who himself was charged with embezzlement, tax evasion, breach of trust, and criminal bankruptcy.

Poullain had not fully disclosed to WestLB management the terms of the consulting fee that Schmidt gave him, nor had he informed WestLB that he had granted Schmidt a loan for the coincidental sum of US$465,000 and had neglected to tell the WestLB management board that Schmidt was under investigative arrest when it granted him another loan for US$930,000, again at the behest of Poullain himself. Poullain later claimed that the charges against him were politically motivated because his steering the bank into an international presence had allegedly upset some state politicians. In 1981 he was found not guilty of the charges.

In 1980 the bank reported that it had made huge profits in foreign currency for 1979, in contrast to 1973. Even so, total earnings were down by almost 68% and the bank stopped paying dividends until 1986.

Profits were down by two-thirds for fiscal 1980, and some called for the resignation of Johannes Völling, who had replaced Poullain. WestLB was suffering from a rise in interest rates. The bank was forced to finance fixed-rate long-term loans with higher-cost short-term funds. Since WestLB is North Rhine-Westphalia’s central bank and the clearing bank for the area’s 159 savings associations, any dip in WestLB’s profits affects the region.

Eventually Völling did resign, in July, 1981, stating that the bank’s low profits had eroded confidence in his ability. Friedel Neuber, formerly head of the Rhineland Federation of Savings Banks, was appointed the new chairman. The 46-year-old Neuber’s appointment drew criticism, as he had never worked at a bank. Neuber’s priorities were to restructure, review operations for profitability, and expand the bank’s international business.

In late 1981, WestLB sold its stakes in two industrial companies, Philipp Holzmann and Preussag, raising some DM700 million, part of it to cover anticipated losses for the year. In mid-1982, WestLB raised DM1.12 billion in new capital from its shareholders; the North Rhine-Westphalia state government contributed the most, raising its stake in the bank to its present 43%. This capital increase was designed to provide WestLB with capital for future growth and to help mitigate the higher degree of risk involved in its loans to Third World countries. WestLB began to strengthen its loan-loss reserves following Mexico’s suspension of debt payments in August, 1981; by 1988, its reserves covered more than 50% of its exposure.

These measures soon paid off; WestLB’s earnings rose sharply in 1982—enough to allow it to repurchase a 35% stake in Preussag.

In 1984 WestLB, along with four other German banks, combined forces to create a new venture-capital company. The same year at least one top credit official on the management board resigned because of his role in the bank’s involvement with Deutsche Anlagen Leasing GmbH, a lending concern that lost huge amounts of money due to overextension, weak management controls, and devaluation of its assets. Nevertheless, WestLB again experienced high earnings in 1986 and that year was able to resume the payment of dividends.

During 1985-1986 WestLB increased its international business, as Neuber had long planned. In 1985 Owens-Illinois Inc. sold a 58% share of Gerresheimer Glas AG to the bank, which syndicated the glass manufacturer for other German investors. In 1986 WestLB dramatically heightened its international profile by taking part in an arrangement with the Japanese to sell securities on the Tokyo exchange. In exchange for access to the deutsche mark bond Europe market, the Japanese allowed WestLB and three other large German banks to deal securities under certain limited circumstances.

This strong international position allowed WestLB to lead a banking syndicate that bought a one-fourth share in the Deutsche Babcock AG engineering group from the government of Iran in 1987. And the bank again profited from selling the shares to institutional investors after syndicating its interest in the acquired firm.

As part of the improvement of economic and political relations between Eastern and Western Europe, in May, 1988 WestLB joined most of the other major German banks in offering sizable loans to the Soviet Union. WestLB also played a historic role in furthering open trade when a Swiss subsidiary of the bank brought Moscow’s first foreign bond issuance since the 1917 revolution to market, in a formal acknowledgment of the close economic ties that exist between the two countries.

WestLB also revived its plan to merge with Hessische Landesbank. Though the proposed merger caused much excitement, the planned merger collapsed in December, 1988 and the state of Hessen, Hessische’s home region, plans to sell its 50% stake in Hessische to the Hessen savings banks, which disapproved of the proposal.

Even so, WestLB’s future looks bright. The unification of the European Economic Community in 1992 should help the bank, whose presence is mostly in European and other Western markets. In an effort to enhance its business, WestLB has been increasing its representation both abroad and at home. This increase includes a link-up with the British Standard Chartered Bank. WestLB has also benefited from a January, 1987 reorganization designed to strengthen its investment-banking operations.

For the most part, WestLB seems to have overcome the difficulties it experienced during the 1970s and the early 1980s, and is now one of the strongest as well as the fourth-largest West German bank.

Principal Subsidiaries

WestLB International S.A. (Luxembourg); Banque Franco-Allemande S.A. (France); Bank für Kredit und Aussenhandel AG (Switzerland); WestLB (Schweiz); WestLB Securities Pacific Ltd. (Japan); WestLB UK Ltd.