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Business

Bavarian state bank to cut 5,600 jobs

Latest update : 2008-12-01

BayernLB, Bavaria's regional state bank, will cut 29% of its workforce by 2013. Of a total 19,200 personnel, 5,600 people will be fired, mostly in Asia, in order to save 670 million euros, the bank says.

(AFP) - The troubled German regional bank BayernLB said on Monday that it would shed more than a quarter of its workforce by 2013, with Asian operations slated to bear the brunt of a rigourous downsizing.
  
A statement said BayernLB would eliminate 5,600 posts of a total 19,200 in a bid to save 670 million euros (850 million dollars) over the next five years.
  
BayernLB "will be smaller and engaged in fewer activities, but it will emerge stronger closer to its customers and less susceptible to incalculable risk," chairman Michael Kemmer was quoted as saying.
  
The state-owned bank will refocus its activities in "Bavaria, Germany and selected regions of Europe," while closing branches in Hong Kong, Shanghai, Beijing, Tokyo and Mumbai.
  
"The New York and London branches, which are key to the German customer business, will be streamlined considerably," the statement said.
  
In Europe, an office in Milan will be closed and restructuring programmes will affect the online bank Direktbank DKB and Austrian subsidiary Hypo Group Alpe Adria, which is active in the Balkans and eastern Europe.
  
On Friday, the Bavarian-based bank said it would request 10 billion euros in fresh capital from public sources.
  
BayernLB planned to ask for about seven billion euros from the state of Bavaria and three billion from the federal government's stabilization fund, or SoFFin.
  
"It makes more sense economically for the bank to contract debt from the regional state rather than the federal state," regional finance minister Georg Fahrenschon told a press conference.
  
Another 15 billion euros in loan guarantees was to be sought from SoFFin however, along with six billion euros in guarantees on the bank's risky asset-backed securities (ABS).
  
Bavaria is set to become BayernLB's principle owner, along with a regional savings bank association.
  
In October, BayernLB had asked for around 6.4 billion euros in aid after estimating losses at several billion euros in 2008 as a result of the global financial crisis.

Date created : 2008-12-01

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