Mr Jurgen Sengera, the chairman of WestLB, stepped down yesterday after the owners of Germany's biggest state-owned lender failed to support him in the face of a damning report from financial regulators.
His resignation, after a hurriedly called shareholders' meeting, deals a heavy blow to WestLB's reforms and casts a shadow over the efforts of Germany's Landesbanks to restructure their businesses before the abolition of state guarantees in 2005.
The future shape of the bank, which suffered a €1.7 billion pre-tax loss last year, has now been thrown into doubt, said bankers.
Two other directors will step down too, officials said.
Ms Robin Saunders, head of the bank's London-based principal finance unit, is also expected to quit.
It was the London unit that was mainly responsible for the bank's problems after it suffered heavy losses on a deal involving BoxClever, a UK television company. WestLB is is still weighing the possible sale of the London operation.
Ms Saunders has expressed an interest in buying the unit.
Mr Bernd Luthje, head of WestLB's supervisory board, said Mr Sengera was leaving after a report by Germany's financial watchdog BaFin criticised grave weaknesses in risk management at the bank.
Pressure on Mr Sengera, who headed the bank for barely two years, mounted over the weekend after BaFin sharply criticised his role and that of the two other directors in the BoxClever deal.
The state guarantees ensured lower funding costs and many of the Landesbanks will struggle to generate profits when they end.
- (Financial Times Service)
