Bayerische Landesbank, the German state-owned bank that last week asked for fresh capital, plans to cut 5,600 jobs, or 29 per cent of the workforce, as it scales back its international business.
The job cuts are scheduled to be completed by 2013, BayernLB said in an e-mailed statement today. The lender aims to reduce administrative costs by €670 million over that period as it refocuses its operations on Germany and "selected European regions" it added.
Munich-based BayernLB said it will get €10 billion ($12.7 billion) in additional funds from the state of Bavaria, as well as debt guarantees of €15 billion from the German government's €500 billion financial-industry rescue fund.
The company, which in October forecast a loss of €3 billion for the year, said it will "completely withdraw from Asia".
"We will need the courage to make fundamental changes to the way we think about and conduct business," Chief Executive Officer Michael Kemmer said in the statement. "Severe cuts will have to be made along the way."
BayernLB will keep its units in Europe including Austrian lender Hypo Alpe-Adria Bank International AG, DKB Deutsche Kreditbank and Budapest-based subsidiary Magyar Kulkereskedelmi Bank Zrt.
It also received a guarantee of €4.8 billion from the state of Bavaria for its portfolio of asset-backed securities, which had a value of €19.9 billion at the end of June. The lender agreed to cover the first €1.2 billion of potential losses on those investments.
Bloomberg