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Germany reviewing West LB aid request

Source: Reuters - Mon 16th Nov 2009

Germany is reviewing applications for state aid from regional lender West LB but no decision has been taken yet on whether to assist the bank, a Finance Ministry spokesman said on Monday.

Berlin and its bank rescue fund Soffin have been keeping a close eye on West LB, which is restructuring in response to the financial crisis and state pressure to merge with its peers.

"West LB has made applications to Soffin for measures under the 'bad bank' law and talks are being held on this, and these applications are being examined" the spokesman said.

A government source told Reuters last Thursday that an effort by Soffin to shore up West LB's capital base was "anything but fanciful" adding that a 3 billion-euro ($4.49 billion)injection was under discussion.

A second source close to the country's governing coalition said a capital injection by the state was "very likely".

Soffin took a 25 percent stake in Germany's second-biggest lender, Commerzbank, in exchange for an equity capital injection, and also took complete control of property financier Hypo Real Estate, since renamed Deutsche Pfandbriefbank.

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