Faced with enormous losses, German bank WestLB got a bit of help Wednesday, April 30, when the European Union approved a state-backed rescue package.
The EU approved a rescue package for Duesseldorf-based bank WestLB.
The bailout, worth 5 billion euros [$7.8 billion], was funded in part by the state of North Rhine-Westphalia, which holds direct and indirect stakes in the bank totalling around 38 percent. German officials had registered the rescue package with Brussels on March 27 as part of the EU's regulations requiring the examination of state support.
EU Commissioner for Competition Neelie Kroes said the decision to aid a bank in crisis came quickly. She also noted that approval is contingent on the creation of a restructuring program that Germany must introduce by August 8.
EU Commissioner for Competition Neelie Kroes.
"I'm confident that the restructuring of WestLB will continue in cooperation with the German public authorities," Kroes said.
In line with EU regulations
Officials at the EU deemed the risk shield to amount to state aid. A statement they released noted that the support fell "in line with EU rules on rescue aid because strict conditions ensure that the aid is limited in time and reversible."
News of the rescue package's approval comes just one month after WestLB posted a net loss of 1.6 billion euros for 2007. The amount was greater than predicted, as the bank was hit by its exposure to the US market for subprime home loans.