Landesbank Baden-Württemberg said Dec. 5 that it sold almost all remaining €4.2 billion in legacy assets bundled in its Sealink Funding portfolio, a leftover from former Landesbank Sachsen Girozentrale, or SachsenLB.
Sealink Funding was created before debt-ridden SachsenLB was sold to LBBW in 2008, and the original size of the portfolio was €17.3 billion, with a €2.75 billion guarantee provided by the state of Saxony as a backstop for potential loan losses. LBBW refinanced the Sealink portfolio through a loan guaranteed by the state of Baden-Württemberg, which is one of the owners of the landesbank.
The latest sale means LBBW's trustees, including the state of Baden-Württemberg, the savings banks association of Baden-Württemberg and the city of Stuttgart, will not face any more Sealink-related risks. The guarantee provided by Baden-Württemberg, which is due as a result of the sale, will not be taken into account and LBBW will not have to cover costs related to risk provisions.
For legal reasons, LBBW is keeping a small remainder of the Sealink assets, with the resulting risk to be completely covered by the initial state guarantee provided by Saxony. After clearing all legal hurdles LBBW plans to sell the assets and wind up Sealink in 2018.
