BayernLB
Encyclopedia
BayernLB or Bayerische Landesbank (Bavarian State Bank) is a publicly regulated bank based in Munich
, Germany
and one of the eight Landesbank
en. It is 94% owned by the free state of Bavaria
(indirectly via BayernLB Holding AG) and 6% owned by the Sparkassenverband Bayern, the umbrella organization of Bavarian Sparkassen. With a balance of €416 billion and 19,200 employees (in the group; 5,170 in the bank itself), it is the eighth-largest financial institution in Germany.
s, securities trading and asset management, as well as mid-term and long-term bond
issuance and securitization
. The bank is refinanced through a variety of commercial debenture
instruments.
As a state and municipal bank, BayernLB is responsible for comprehensive credit and financial counsel for the state of Bavaria and its municipalities and districts
.
Through its subsidiaries, the bank is involved in a variety of further business areas. The Bayerische Landesbodenkreditanstalt is an organ of state housing policy, while the LBS Bayern is a public building society
(Bausparkasse). Through its full ownership of the Deutsche Kreditbank, based in Berlin, BayernLB is also involved in retail banking
.
In its current form, the bank was founded by law on June 27, 1972, through the merger of the two institutions. Its first President was CSU
veteran politician Karl Theodor Jacob. Later managers and Board members would also frequently be drawn from politics.
The bank expanded internationally in the 1990s, gaining toeholds in East Asia, Eastern Europe and the United States. Through the 2007 acquisition of a 50.01% share in Hypo Group Alpe Adria for a sum of €1.625 bn, BayernLB expanded its geographic presence to Austria and the Balkans.
. Although the extent of these investments has been the topic of speculation, it was revealed from the company's Q2 2008 financial report that over €24 billion had been invested in critical securities, with losses of €2.3 billion in 2007 and a further €2 billion in the first quarter of 2008.
The heavy public criticism took its first toll in March, 2008 when CEO Werner Schmidt resigned. The crisis also consumed the governing CSU
party and its chairman, Erwin Huber
, who as Bavarian Minister of Finance was the acting chair of the bank's Administrative Council and was accused of covering up the extent of losses. The bank and the losses were major factors in the September, 2008 parliamentary elections
, in which the CSU had its worst election result since 1962 and Huber resigned.
The bank's shares slipped more than 2% after the country's central bank said it was time to roll back some of its economic support measures after recent crisis. The bank representatives advise economy was not ready for an increase in borrowing costs, and so the goal is to keep interest rates on hold. But it said it would end some of the measures it had introduced during the global downturn to increase the amount of money in the financial system. The German economy has continued to grow during the downturn. This is in stark contrast to more developed economies that fell into recession.
Munich
Munich The city's motto is "" . Before 2006, it was "Weltstadt mit Herz" . Its native name, , is derived from the Old High German Munichen, meaning "by the monks' place". The city's name derives from the monks of the Benedictine order who founded the city; hence the monk depicted on the city's coat...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
and one of the eight Landesbank
Landesbank
The Landesbanken in Germany are a group of state owned banks of a type unique to Germany. They are regionally organised and their business is predominantly wholesale banking...
en. It is 94% owned by the free state of Bavaria
Bavaria
Bavaria, formally the Free State of Bavaria is a state of Germany, located in the southeast of Germany. With an area of , it is the largest state by area, forming almost 20% of the total land area of Germany...
(indirectly via BayernLB Holding AG) and 6% owned by the Sparkassenverband Bayern, the umbrella organization of Bavarian Sparkassen. With a balance of €416 billion and 19,200 employees (in the group; 5,170 in the bank itself), it is the eighth-largest financial institution in Germany.
Main business activities
As a commercial bank, BayernLB offers private and commercial customers a universal range of services in private, industrial, investment and foreign business. This includes loanLoan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s, securities trading and asset management, as well as mid-term and long-term bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
issuance and securitization
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation , to...
. The bank is refinanced through a variety of commercial debenture
Debenture
A debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...
instruments.
As a state and municipal bank, BayernLB is responsible for comprehensive credit and financial counsel for the state of Bavaria and its municipalities and districts
Districts of Germany
The districts of Germany are known as , except in the states of North Rhine-Westphalia and Schleswig-Holstein where they are known simply as ....
.
Through its subsidiaries, the bank is involved in a variety of further business areas. The Bayerische Landesbodenkreditanstalt is an organ of state housing policy, while the LBS Bayern is a public building society
Building society
A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially mortgage lending. These institutions are found in the United Kingdom and several other countries.The term "building society"...
(Bausparkasse). Through its full ownership of the Deutsche Kreditbank, based in Berlin, BayernLB is also involved in retail banking
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
.
History
Through its predecessor, the Bayerische Gemeindebank (founded 1914), and its much older subsidiary, the Bayerische Landesbodenkreditanstalt (founded 1884), BayernLB can claim to have more than 100 years of history.In its current form, the bank was founded by law on June 27, 1972, through the merger of the two institutions. Its first President was CSU
Christian Social Union of Bavaria
The Christian Social Union in Bavaria is a Christian democratic and conservative political party in Germany. It operates only in the state of Bavaria, while its sister party, the Christian Democratic Union , operates in the other 15 states of Germany...
veteran politician Karl Theodor Jacob. Later managers and Board members would also frequently be drawn from politics.
The bank expanded internationally in the 1990s, gaining toeholds in East Asia, Eastern Europe and the United States. Through the 2007 acquisition of a 50.01% share in Hypo Group Alpe Adria for a sum of €1.625 bn, BayernLB expanded its geographic presence to Austria and the Balkans.
Involvement in the mortgage crisis
In early 2008 it was revealed that BayernLB had made large losses due to investments in sub-prime mortgage securities in the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Although the extent of these investments has been the topic of speculation, it was revealed from the company's Q2 2008 financial report that over €24 billion had been invested in critical securities, with losses of €2.3 billion in 2007 and a further €2 billion in the first quarter of 2008.
The heavy public criticism took its first toll in March, 2008 when CEO Werner Schmidt resigned. The crisis also consumed the governing CSU
Christian Social Union of Bavaria
The Christian Social Union in Bavaria is a Christian democratic and conservative political party in Germany. It operates only in the state of Bavaria, while its sister party, the Christian Democratic Union , operates in the other 15 states of Germany...
party and its chairman, Erwin Huber
Erwin Huber
Erwin Huber is a German conservative politician. He was leader of the Christian Social Union of Bavaria from 2007 to 2009.-Early life:...
, who as Bavarian Minister of Finance was the acting chair of the bank's Administrative Council and was accused of covering up the extent of losses. The bank and the losses were major factors in the September, 2008 parliamentary elections
Bavaria state election, 2008
The 2008 Bavarian state election was held on September 28, 2008. Voters of the German state of Bavaria elected members to the Bavarian Landtag .-Outcome:...
, in which the CSU had its worst election result since 1962 and Huber resigned.
The bank's shares slipped more than 2% after the country's central bank said it was time to roll back some of its economic support measures after recent crisis. The bank representatives advise economy was not ready for an increase in borrowing costs, and so the goal is to keep interest rates on hold. But it said it would end some of the measures it had introduced during the global downturn to increase the amount of money in the financial system. The German economy has continued to grow during the downturn. This is in stark contrast to more developed economies that fell into recession.
See also
- SaarLB (75,1 %) (Saarland Landesbank)
- Deutsche Kreditbank (DKB) (direct bank)
- MKB BankMKB BankMKB Bank is the third-biggest commercial bank in Hungary, and was the first to be privatised, in 1994. It is controlled by BayernLB.-External links:*...
(Hungarian bank) - MKB Romexterra BankMKB Romexterra BankMKB Romexterra Bank is a Romanian bank based in Bucharest and a member of BayernLB Group....
(Romanian Bank) - Hypo Group Alpe Adria (Austrian bank)
- MKB Unionbank (Bulgarian Bank)