THE SOVEREIGN INTERESTby Frédéric LordonEdYoung people read less than their elders 45Then each President will bet on his personal equation This is not the business tax reform it addedInvolvement of the State in either activityAnd at a time when the market is very competitive17 or below half the rate for the Japan 0The Elysee and Matignon supported the approachIn this regard some trends seem to prevailAsia is therefore an environment preferredIf Ludwig Poullain, at the age of eighty-nine years, has taken his pen to defend his candidacy for the Presidency of WestLB, it is that time is serious. In a letter to the Supervisory Board, the former "star banker" has proposed what he wanted himself to implement at the time where he directed the Bank from 1969 to 1977: merge the WestLB with the Rhineland savings banks, and then the privatization. Its initiative, of course, should not be taken seriously, but be interpreted as evidence of "bitterness" to the collapse of the regional bank, still under the influence of a public shareholder, he said. WestLB had five leaders and two quasi-faillites since 2000.
This anecdote reported by the "Financial Times Deutschland" shows the State of helplessness of the Germany with its "Landesbanken". It is thirty years that a consolidation is on the table for these institutions held by the Länder and savings. Thirty years all attempts, with a few exceptions, fail.
Too small, with a risk control insufficient, torn by conflicts of interest with the policy, the German regional banks were the first victims of the financial crisis. It is mainly they who were referred when Günther Verheugen, European Commissioner responsible for business and industry, said that "the Germany has been risky banking world champion." Of the 700 billion toxic assets remaining in the accounts of German banks, 500 billion allocated for the Landesbanken, according to the Government of Angela Merkel.
Parliamentary inquiry
The crisis peaked when the State of Schleswig-Holstein and the city of Hamburg had to make, in February, 3 billion euros in capital and $ 10 billion of guarantees to the HSH Nordbank. The conservative regional elected Rasmus Vöge had said the Land of Schleswig-Holstein in a situation of "incompetent".
Five months later, the wounds of the political crisis, which had resulted in the departure of the regional Minister for the economy, are still vivid in this small adjacent region of the Denmark, to the annual budget of EUR 8.6 billion. Members of Parliament voted, in June, the opening of a parliamentary inquiry to determine responsibility in the case of HSH Nordbank, in parallel with the judicial investigation. "The Ministry of Finance has concealed the real state of the Bank for too long." "He left too long believe to Parliament and the public that the institution was not in crisis and that the situation was under control," then launched Wolfgang Kubicki, Member of Parliament liberal and leader of the opposition. Monika Heinold, representative of the Greens in the regional Parliament, believe that a "resignation would be inevitable" If the investigation proves the failure of the Government. And always the same questions coming: why MSM has developed a portfolio of securities of EUR 30 billion Why the Bank, which is to finance the regional economy, has created hundreds of vehicles to the names just as exotic as investments, of the type "Poseidon" or "Carrera Capital", implanted in the island of Jersey Why control risks did he not been strengthened Why have alerts been ignored
Before the crisis, HSH Nordbank still represented a hope of restructuring for the Landesbanken. From establishment of the merger of the public banks of Kiel and Hamburg had allowed investment fund JC Flowers to his capital, for an introduction on the stock market to the 2008 horizon. He boasted of having a "business model", unlike the other Landesbanken, in connection with the regional economy: the maritime sector and transportation funding. But, as others, HSH Nordbank has used the four years preceding the loss guarantees of State (see opposite) to raise lots of money and invest in areas that had nothing to do with its core business: the U.S. real estate, loans to companies in Asia, LBO financing. And, with the blessing of the Supervisory Board, composed mostly of political and Union representatives. The Bill fell: impairments of EUR 2.9 billion in fiscal year 2008.
Time bomb
In the thriving city of Hamburg, same table: the emergency plan implemented for HSH Nordbank leaves a bitter taste. "When I see all these people passing in the street and that will contribute financially to the rescue, I find it absurd that the Bank still has a collection of art or even a yacht for advertising purposes," slip Harald Krüger, a Conservative Member of the City-State.
From his Office of financial administration, Rainer Klemmt-Nissen, in charge of the management of entries, argues that there was no alternative. Knowing that 60 of the 200 billion of the balance sheet are already guaranteed by the State, "a bankruptcy would have caused even greater losses", he said. And then what the consequences for maritime and aviation in the region building According to him, "even a gradual liquidation was not an option, because this would have reduced competition in the supply of credit and therefore access to finance for SMEs".
In Germany, the crisis of the Landesbanken is often presented as the result of selfishness of regional elected representatives, who wish to keep their bank for political purposes. Curious paradox in the land of the "Ordnungspolitik", doctrine according to which the State must confine itself to fix the rules without directly intervening in the economy: where a Minister-President of region leaving spinning his bank, he loses the next election, but when the Minister of Economics Karl-Theodor zu Guttenberg stated that the Federal State should not save Opel, it is gaining in popularity.
Rainer Klemmt-Nissen "unjust" considers the trial is now in the Länder: "two years ago, you would have found person to criticize the model of HSH Nordbank.". We already had the intention to privatize. "Hans-Jörn Arp, a leader of the CDU in Schleswig-Holstein, it is also because the Bank was paying good dividends to the regional State that was not there to pressure to limit its expansion. "We were proud to be a global actor shareholders, and we could not measure the risk," he said.
Now, the Land of Schleswig-Holstein, and Hamburg, both already much indebted, will have to shoulder a rescue plan which the consequences to the taxpayer are difficult to measure. Because it is impossible to know the amount of the actual losses incurred guarantees, and under what conditions the public shareholder may sell his participation. Another unknown: HSH Nordbank must pay 4 fee on the guaranteed amount, i.e. EUR 400 million per year. But its net result reached on average 420 million from 2005 to 2007, in a period of growth. Harald Krüger says that local elected officials were "still a little fear in the stomach, because there are always uncertainties."
Therefore, a question: through all the guarantees and capitalization to the Landesbanken, have it not initiated a real time bomb "The difficulties of the Landesbanken weigh on the marking of their shareholders." "The Länder should, in our view, this burden, but there will be certainty only in more than five years, when the majority of the assets at risk will be arrived at maturity", said Aloys Strasser, of the Standard & Poor's Agency. In all cases, these rescues have drowned out the budgetary discipline efforts made by the Länder between 2005 and 2008.
A back to the "consolidation".
The Federal Government in Berlin, is the opportunity to dream of imposing, finally, a concentration of the sector. The Parliament will adopt tomorrow, a law allowing banks to shed their toxic assets in a hiving-off structure. In Exchange, the Länder have given their agreement in principle to contribute to the consolidation. But this project of "bad bank" is not a great enthusiasm. For the moment, only WestLB expressed an interest. Institutions which have resisted well to the crisis, namely NordLB, Helaba and Landesbank Berlin, have no desire to merge with a dwindling Bank. For HSH Nordbank, regional policy hardly imagine integrate the Bank to a national holding company, but rather an assignment to an investor or an introduction on the stock exchange. But everyone. Rainer Wiegard, the Minister of Finance of Schleswig-Holstein, may mean "a reduction in the number of Landesbanken", but also "a reduction of risk or balance sheet total. In other words, if HSH Nordbank reduced its balance sheet, half as foreseen in the restructuring, "the Bank will have already committed measures with a view to consolidation". The concentration of the Landesbanken, definitely was not for tomorrow.
