German bank plans to lay off employees

Bloomberg

The job cuts are scheduled to be completed by 2013, BayernLB said in an e-mailed statement yesterday. The lender aims to reduce administrative costs by 670 million euros over that period as it refocuses its operations on Germany and "selected European regions," it added.

Munich-based BayernLB said it will get 10 billion euros ($12.7 billion) in additional funds from the state of Bavaria, as well as debt guarantees of 15 billion euros from the German government’s 500 billion-euro financial-industry rescue fund. The company, which in October forecast a loss of 3 billion euros for the year, said it will "completely withdraw from Asia."

Fundamental changes
"We will need the courage to make fundamental changes to the way we think about and conduct business," Chief Executive Officer Michael Kemmer said in the statement. "Severe cuts will have to be made along the way."

BayernLB will keep its units in Europe including Austrian lender Hypo Alpe-Adria Bank International, DKB Deutsche Kreditbank and Budapest-based subsidiary Magyar Kulkereskedelmi Bank.It also received a guarantee of 4.8 billion euros from the state of Bavaria for its portfolio of asset-backed securities, which had a value of 19.9 billion euros at the end of June. The lender agreed to cover the first 1.2 billion euros of potential losses on those investments.