According to The Financial Times, bidding has started for the 81% stake in Landesbank Berlin Holding being sold by the city of Berlin, in a landmark event that marks the first real chance for private banks to enter Germany's previously protected savings banks market.
Berlin rescued Landesbank in 2001, after it was bankrupted by a collapse in the property market. Conditions set by the European Commission, however, obligate the city to sell its stake by the end of 2007. Landesbank has been valued at approximately $6.5 billion by the banking industry.
According to The Financial Times, Berlin has commented that by the deadline on February 5, 2007, 19 unnamed public and private banks, including German and foreign institutions and private equity companies, had voiced an interest in Landesbank.
Reuters has reported a source close to the bank as commenting that private banks Commerzbank AG and UniCredit SpA are among the interested parties and that private equity investors Texas Pacific Group and JC Flowers have jointly voiced their interest.
Reuters added that, while these banks had not commented on the situation, public bank WestLB had confirmed its interest. According to The Financial Times, HSH Nordbank and HVB also intend to participate.
Although the sale is being embraced by private banks, which have protested that the protection of public banks restricts competition; Germany’s savings banks, which are community-based and not for profit, are against Lendesbank’s privatization.
According to The Financial Times, the German savings banks’ association (DSGV), which has opposed the sale from the start, is planning to tender an offer for Landesbank in a bid to keep Berliner Sparkasse, Landesbank’s savings bank that serves almost half of all Berliners, in public hands.