WestLB AG – $4.8B
May 19, 2008 – 7:35 am2008-05-19 – Off Balance:
Banks are not writing down their write downs and getting away with it. Instead they are writing them down in the balance sheet and there is a distinction.
WestLB AG was hiding $1.6 billion on the balance sheet, but we will balance thing out for them by adding $1.6 billion to their existing $32.2 total bringing them up to $4.8 billion.
2008-01-05 Bail Out:
The ailing reality of WestLB is catching up. After months of soft selling it’s subprime related causalities documented below reality set in as the EU came to the rescue.
2008-02-04:
We were curious to see how West LB AG would fare and it seems to be much worse than expected for the wear:
The loss of 1.6 billion euros ($2.5 billion) exceeded the company’s 1 billion-euro estimate from February. Germany’s third- biggest state lender said today it wrote down 2.01 billion euros and expects further markdowns in the first quarter.
The bank also sang the same old refrain ”more write downs expected’.’ But it is time — past time — to go from curious to serious on West LB AG and keep an eye on the ailing nature of its existence:
“WestLB is living on borrowed time,” said Simon Adamson, an analyst at CreditSights in London. “If it hadn’t been for the support from the state and owners, WestLB wouldn’t still exist. You always expect the worst from WestLB.”
‘Nuff said — and $3.14 billion in first quarter 2008 write downs with more to come.
2008-17-02:
Beyond the garden variety subprime related losses WestLb AG has suffered catastrophic trading losses in the first half of 2007 of €604m ($825m), and a scandal which forced Rolf Gerlach (the chairman of the bank’s supervisory board) to leave.
From FT.com:
April 2007: Last year, WestLB was first hit by an equity trading scandal that cost more than €600m in writedowns and led to the dismissal of Mr Fischer as the bank’s risk-control once again came under scrutiny.
Estimates of the annual losses have been upwards of a billion euros ($1.46 billion) with writedowns of as much, but so far the bank has reported 2007 results only through its third quarter. According to its press release of December 6, the bank posted a € -116 million pre tax loss for the first nine months of 2007. In addition postbank said it had taken a €61 million write down related to subprime exposure in the third quarter.
WestLB also has two SIVs — Harrier and Kestrel — with a combined volume of more than $13 billion. The bank provided a credit guarantee of more than $11 billion to Harrier Finance; a forced move to prevent the erosion of the bank’s capital base further.
Reading the bank’s final score card will be difficult until it reports full year 2007 results. So far we have only the € -116 million pre tax loss plus the €61 million write down (a total of about $82M in outright loss), but then there’s that 11 billion euro albatross around WestLB’s neck spelled “SIV.” It will be interesting to see how they book the expense. Let’s hope it doesn’t collapse all at once!
