German bank BayernLB unveils 5,600 job cuts, mainly in Asia

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 rigorous 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 all Asian operations, including 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.

Around 800 jobs would be cut in Germany, a bank spokesman told AFP.

Elsewhere 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, along with six billion euros in guarantees on the bank's risky asset-backed securities (ABS) was to be sought from SoFFin however.

Strict conditions on federal aid appeared to be "very complex and partially handicapping," in the view of both the state and BayernLB, Fahrenschon said.

Bavaria is now set to become BayernLB's dominant shareholder, along with a regional savings bank association.

In October, BayernLB had asked for around 6.4 billion euros in federal and state aid after estimating losses at several billion euros in 2008 as a result of the global financial crisis.

Other regional banks such as LBBW and HSH Nordbank have also appealed to the federal fund or state-based shareholders for help.

Source : AFP
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]