April 12, 2019 / 1:01 PM / 2 months ago

German state considers a sale of lender BayernLB -source

MUNICH, April 12 (Reuters) - Bavaria’s state government is considering a sale of lender Bayerische Landesbank (BayernLB) , which is 75 percent owned by the German regional state, people close to the matter told Reuters.

A sale would follow the 2018 privatisation of another regional bank, HSH Nordbank, and a deal to rescue peer NordLB struck earlier this year.

“A sale of BayernLB is an option,” one of the people said, while a second person said that the Bavaria state government did not necessarily need to own a bank.

Both stressed that considerations are at an early stage and that it was unclear whether the state would eventually move to sell all or part of its stake.

A decision on the future of BayernLB, in which regional savings bank hold 25 percent, is expected once a strategic review is concluded later this year.

Until now, Bavaria had ruled out a privatisation of BayernLB.

The Bavarian finance ministry declined to comment.

According to the sources, Bavaria - which bailed out BayernLB during the global financial crisis with 10 billion euros ($11.3 billion) - is concerned that potential risks may surface at BayernLB in the future and that BayernLB may have to help prop up other ailing landesbanks.

As member of a protection scheme for Germany’s so-called landesbanks, BayernLB had to pay 120 million euros for the NordLB rescue deal struck in February.

In BayernLB’s annual report published on Friday, the bank warned about the low interest rate environment, affects from protectionist regimes and political uncertainties, but said that it expects a 2019 profit of around 500 million euros.

In 2018, BayernLB generated a 22 percent rise in net profit to 828 million euros, boosted by various one-off effects and a solid performance of online lender DKB. ($1 = 0.8837 euros) (Writing by Arno Schuetze; Editing by Susan Fenton)

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