Banking

China Development Bank in fray for troubled German bank: Report

(Agencies)
Updated: 2011-01-30 14:34

HONG KONG - State-owned China Development Bank is among the four final bidders to buy a large stake in stricken German lender WestLB in a deal that could be valued around $13 billion, the Wall Street Journal reported.

Other bidders in the fray are US leveraged buyout firms Blackstone Group, Apollo Global Management and JC Flowers & Co, banking sources and the Journal, which cited sources familiar with the deal, said.

The deadline for the four bidders to submit offers is Feb 11.

A full takeover may be unlikely given the troubled bank's exposure to risky sovereign debt and a big need for funds.

China Development Bank, which has done some preliminary due diligence on the lender, may proceed cautiously and seek a minority stake or a corporate tie-up, sources told Reuters.

It already has a tie-up with another German Bank, HSH Nordbank.

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The State-owned lender is seeking to beef up its deposit network and has shown up at other German bank auctions, underscoring its determination to expand its banking footprint.

WestLB has a strong foothold in lending to Germany's mid-size companies, a big project financing business and also a strong capital markets business.

Partially owned by the German state of North Rhine-Westphalia and local savings banks, it has been put on the block at the request of the EU as a condition for regulatory approval of state aid granted in the financial crisis.

Deputy German Finance Minister Steffen Kampeter said last week the government expects a deal to be reached on the future of the lender by a Feb 15 deadline set by the European Union. 

Analysts and investment bankers have said that while the sale of parts of WestLB could go through, they gauge a sale of the complete bank as unlikely.

Morgan Stanley is advising WestLB on the sale.