Bayern LB, one of Germany's state-owned banks, plans to slash cut more than a quarter of its workforce, eliminating 5,600 out of 19,000 jobs before 2013, the bank said.
An estimated one-fourth of Bayern LB's staff may soon be out the door
The Munich-based Bayern LB, Germany's second largest state-owned bank, has been hit hard by the global financial crisis.
The ailing bank said in October that was tapping Germany's special 500 billion euro ($645 billion) bank rescue package to help it limp through the financial crisis. Last week, the bank, which is half-owned by the state of Bavaria, requested a public bailout totaling 10 billion euros, 3.6 billion euros more than it had originally requested.
On the heels of that request, the bank is set to unveil official restructuring plans that one bank insider said include severe job cuts.
In future, Germany's second-biggest state-owned bank will wind back its international operations to focus on small-to-medium-sized German companies. As a result, the restructuring plan throws into doubt the prospects for its investment banking business.
Union: an "unprecedented debacle"
Bayern LB officials said they want to focus on German companies
The news of the job cuts was sharply criticized by the Bavarian branch of the Verdi employees union.
"Our worst fears have been confirmed," said Josef Falbisoner, regional manager at the union said Monday. "Politics and bank management have resulted in an unprecedented debacle. And now the consequences of that debacle are being felt by the employees."
Several weeks ago, Falbisoner explained, the savings package was supposed to help prevent the crisis from affecting the workers. But with state support, he noted, "dismissals and severance packages for the employees have been ruled out."
Politicians, he said, must hold somebody accountable for the losses.
Bayern LB's announcement in October that it had run up bigger- than-forecast losses was a factor in the resignation of Bavarian Finance Minister Erwin Huber.