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CMS Hasche Sigle successful for Landesbank Baden-Württemberg before European Commission

05/06/2008

US financial market crisis: EU approves aid for Sachsen LB

Brussels – Today the European Commission approved aid to salvage and restructure Sachsen LB. When the bank found itself in massive financial difficulties, a pool agreement was concluded with other regional banks. In the next phase Sachsen LB was sold to Landesbank Baden-Württemberg (LBBW). LBBW is the largest of the regional banks in Germany.

This is the first bank case approved by the European Commission in connection with the US subprime crisis. Thus, Sachsen LB is the first bank that could be led back to calmer waters after the turbulence.

Sachsen LB was in dire financial straits as a result of the US subprime crisis. Since the liquidity support from other banks did not bring about the necessary breakthrough, Sachsen LB was sold to LBBW in August 2007. Sachsen LB faced further difficulties in the fall of 2007 when the financial market crisis did not subside. Thus, in December 2007 the Free State of Saxony declared that it was willing to spin off particularly high risk capital market items of approx. EUR 17.5 billion from Sachsen LB into a special purpose vehicle. The Free State of Saxony put up a non-payment guarantee of EUR 2.75 billion for this portfolio. The European Commission was notified in January 2008 of the measures in support of Sachsen LB. The European Commission then initiated formal investigation proceedings in late February.

Through intense negotiations with the EU Commission, which also involved the minister presidents of Baden-Württemberg and Saxony, the Commission granted its approval after an unusually short review period of only four months.

Before and during the investigation proceedings before the European Commission, LBBW was advised by a team from the CMS Hasche Sigle Brussels office led by Dr Michael Bauer. The legal team of LBBW was led by Dr Armin Brendle, Head of group strategy and legal department, and Dr Stefan Hofmann, Head of legal department (domestic). CMS also advised LBBW on the acquisition of Sachsen LB.

Adviser CMS Hasche Sigle
Dr Michael Bauer
Dr Matthias Nordmann
Dr Rolf Hempel


Contact CMS Hasche Sigle:
Dr Michael Bauer
Tel.: +32 (2) 65 00 425
E-mail: [email protected]


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Michael Bauer
Dr. Michael Bauer
Partner
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Rolf Hempel
Dr. Rolf Hempel
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Stuttgart