Landesbank Baden-Württemberg, a major automotive sector financier, is planning to reduce its car loan portfolio and curb future lending to vehicle manufacturers, their financial arms and their suppliers, Handelsblatt reported Sept. 2, citing sources.
With €12 billion of automotive loans, accounting for a 15.5% share of its entire portfolio, LBBW is among the most exposed to the sector, according to the report. For comparison, the share of automotive loans in the portfolios of Germany's second- and third-largest private lenders, Commerzbank AG and UniCredit Bank AG, is half the size of LBBW's.
Given the growing risks related to the automotive sector, LBBW wants to reshuffle its focus to other, more stable sectors, Handelsblatt said.
The crisis in the German automotive sector has been deepening in recent years in the aftermath of a carbon emissions scandal. Carmakers are also hit by global trade tensions and the economic slowdown in Europe and Germany. Geopolitical issues such as Brexit are also taking a toll on the industry.
LBBW's move has wider implications for automotive lending as its gradual withdrawal raises concerns among other banks as well, Handelsblatt said. If the leader of a loan syndicate leaves, this sends a bad signal to the rest of the banks that have co-signed the loan, a bank manager told the newspaper.
Bayerische Landesbank AöR is also said to be looking to slightly reduce the automotive share of its corporate loan book, according to sources cited by Handelsblatt.
Both LBBW and BayernLB declined to comment on the matter, the newspaper said.
LBBW is the biggest of the landesbanken, which are public lenders that act as central institutions for the regional savings and loans banks in the various German states. The group is based in Stuttgart, the main hub of the German automotive industry.
