EMCC European Monitoring Centre on Change

BayernLB, Hypo Group Alpe Adria

Company/Organisation:
BayernLB, Hypo Group Alpe Adria

Geographic Location

Country: European Union

Company

Sector: Financial services
Financial and insurance activities
64 - Financial service activities, except insurance and pension funding
Group: BayernLB

Employment Effects

Announcement Date: 10-03-2009
Planned Job Reductions min: 5600
Planned Job Reductions max: 5600
Type of Restructuring: Internal restructuring

Additional Information

BayernLB, the central banking institution of Bavaria, is one of the leading regional banks in Germany and an international player. In 2008, BayernLB made a net loss of EUR 5.1 bn and needed cash injections of about EUR 30 bn. from the German and Bavarian governments. Restructuring plans were made public in December 2008, but no details were given and the restructuring plans have not been approved yet by the EU Commission. However, the restructuring programme 'Hercules' is under way and German media refer to the planned job cuts (5,600 jobs) as a given fact (FTD 02-10-09). In the following we refer to a March 2009 article by Süddeutsche Zeitung which relies on internal BayernLB information. 

The restructuring is meant to streamline the multinational operations of BayernLB which holds subsidiaries in Luxembourg, Austria and eastern Europe. According to Süddeutsche, the centralized management structure of Unicredit is taken as an example. 5,600 out of a total of 19,200 international jobs shall be cut. Subsidiaries and foreign activities shall be sold - if possible - or shall be managed directly from Bavaria.   

Most job cuts, about 2,100, are said to affect Hypo Alpe Adria, the Austria-based subsidairy focussing on  eastern Europe which most probably cannot be sold. Hypo Alpe Adria made a net loss of EUR 520 mn in 2008 and was bailed out by its 67 percent owner Bayern LB and by the Austrian government. Hypo will reduce its staff by 2,100 over the next five years, according to an Reuters article. 

BayernLB's restructuring plans are to be seen in line with the situation of other regional German banks (see factsheets on LBBW and WestLB).