The German bank whose Dublin-based operation had to receive a €17 billion bail-out from other German banks is to be sold.
The state of Saxony is to sell the Sachsen bank, which has been hit by the US sub-prime mortgage crisis, to the Landesbank Baden-Wuerttemberg (LBBW).
The buy-out is being portrayed by the German press as the only possible way of saving Germany's smallest state-run regional bank following the damage it suffered in the sub-prime crisis. Sub-prime mortgages were given to Americans with poor credit histories, but much of the debt was sold on to other financial institutions.
LBBW is expected to pay at least €300m in cash and shares for Sachsen, while it will immediately inject €250m to prop up the bank.
Meanwhile, the German financial watchdog BaFin said on Saturday that Sachsen's Irish subsidiary had been investigated in 2005 and problems with its risk exposure had been found. BaFin had asked for changes in the subsidiary at the time.
