White & Case advises Free State of Bavaria on reorganization of BayernLB’s equity structure

Global law firm White & Case LLP has advised the Free State of Bavaria on the reorganization of the equity structure of BayernLB ensuring, in particular, the continuation of housing promotion via its development institution BayernLabo.

The European Central Bank had objected to the structure of the silent participation of the Free State in BayernLB, established in 2012, and questioned its recognition as regulatory equity capital. The Free State, Association of Bavarian Savings Banks and BayernLB therefore agreed to cancel the silent participation, leave its capital in the bank in its full amount as equity capital and, in return, the Free State's stake in BayernLB Holding AG, the joint holding company of the Free State of Bavaria and the Association of Bavarian Savings Banks, is to be increased from around 75 percent to 80.17 percent.

The percentage share of the Free State and the Association of Bavarian Savings Banks in BayernLB's profit distributions therefore remains essentially unchanged. In addition, BayernLabo will be able to continue its housing promotion.

The subject of the silent participation of the Free State of Bavaria was a portfolio of residential construction loans that had been transferred to BayernLB in several stages since 1994 as a so-called special-purpose deposit, and is used for residential construction funding purposes.

The White & Case team which advised on the transaction was led by partner Henning Berger (Berlin) and included partners Martin Weber (Berlin), Alexander Kiefner, Julia Sitter, Dennis Heuer (all Frankfurt), local partner Jochen Hoerth (Frankfurt), counsel Dirk Eisolt and Christoph Arhold (both Berlin) and associates David Schoo, Cora Wolff, Paul Germershausen (all Berlin) and Philip Eichhorn (Frankfurt).

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