WestLB’s sale of its real estate lending arm, Westdeutsche ImmobilienBank (WestImmo), to New York-based Apollo Global Management has been cancelled after the German bank raised a number of concerns.
In July, WestLB said it had entered into exclusive discussions with Apollo for the sale of WestImmo, which has 450 staff and total assets of approximately €24 billion. However, in an announcement today, the bank described the deal as bringing with it “major potential risks” and said that it “cannot be justified in economic terms”.
While no price was officially revealed by either party, sources told Reuters in July that the lending arm could have set Apollo back about €400 million. Whatever the ultimately tabled offer was, WestLB said in the announcement that it “is not acceptable,” particularly considering certain other considerations “specified in the framework agreement on WestLB”.
Dietrich Voigtlander, chairman of WestLB, said: “It was our declared aim to bring the sale negotiations to a conclusion, with a view to preserving jobs. However, the further deterioration in the market environment and the economic valuation leave us no choice. The transaction and, above all, extended liability risks would be untenable for the bank and its owners.”
The sale of WestImmo originally surfaced after the European Commission made the sale part of the conditions for granting state financial aid to WestLB. One of Europe’s notable lenders in the run up to the start of the global financial crisis, WestLB is one of numerous lenders across the continent to have required state financial injections.