German Bank Expects Billion Euro Loss

January 21, 2008 10:55 a.m. EST

Berlin, Germany (AHN) - With its its exposure to U.S. sub-prime mortgages and unauthorized stock market trades, the German bank WestLB announced Monday it is expecting roughly 1 billion euro ($1.47 billion) in losses for 2007.

WestLB's announcement was made after German financial watchdog Bafin and the country's central bank, the Bundesbank, attended an emergency meeting with the bank's owners aimed at helping the financial institution stabilize.

The expected billion-dollar loss affirms effects of the subprime-triggered credit markets crisis on Germany which has almost plunged into bankruptcy two of its banks while affecting many more.

However, WestLB's owners allayed fears among its clients saying the local community savings banks and the state government of North Rhine-Westphalia would shoulder the losses.

WestLB added that it is now eyeing a merger with its rival state bank Helaba which would fast-track its planned labor shake-up.

The merger is expected to affect one-third of its almost 6,000-strong workforce.