WestLB hired PIMCO as a manager to run a €23 billion ($36 billion) structured debt special purpose vehicle to shield the bank from further losses from the U.S. subprime fallout, confirmed Stephanie Hagelueken, spokeswoman for the North Rhine-Westphalia Ministry of Finance, a co-owner of WestLB. It is possible other managers could help run the portfolio, but Ms. Hagelueken declined to comment whether others have been appointed. The move to separate the portfolio from the company balance sheet was meant to “ensure that WestLB does not incur further earnings losses in the future due to possible fluctuations in the prices of the transferred structured securities,” according to a separate news release issued by WestLB, which had been managing the money previously.
“The comprehensive solution which has been found not only means that the Bank will be freed from most of the burdens resulting from the crisis in the financial markets, but also has the advantage for the owners that they do not need to inject cash funds,” Alexander Stuhlmann, chairman of WestLB’s managing board, said in the release.
