The future of Jürgen Sengera, the chairman of WestLB, and other senior executives was yesterday in doubt after the political battle about the future of the state-owned German bank intensified.
Mr Sengera and some of his colleagues have been dragged into the controversy surrounding WestLB's principal finance division, which is headed by Robin Saunders and which German banking regulators have been picking over for the past month.
The regulator, BaFin, will hand its findings to WestLB today. WestLB will be expected to make a public statement but will say it will discuss its findings more thoroughly at a meeting of its supervisory board on 2 July.
Mr Sengera is unlikely to be referred to directly in the report, which will probably criticise the bank's risk controls. But he is coming under mounting pressure to quit from representatives of the conservative savings banks, which hold shares in WestLB and from trades unions which also have seats on its board.
Mr Sengera said recently he has not spoken directly to Ms Saunders for months, but he has been her most prominent supporter within WestLB.
He saw her division as a key constituent in his plan to transform WestLB into a commercial bank able to compete with rivals such as Deutsche bank and the international investment banks. However, BaFin's inquiry into the principal finance unit has revealed deep divisions between stakeholders in WestLB. Representatives of the local savings banks, which own about a third of WestLB, have made it clear they want the bank to abandon commercial and wholesale banking and return to its roots as a domestic bank.
A number of politicians in North Rhine Westphalia, where the bank is based, have also used the BaFin investigation to attack Ms Sengera's plan to spin off WestLB's commercial lending arm, which includes principle finance by 2007. Ms Saunders' reputation has been badly harmed by the investigation into her department's decision to loan the TV rentals business BoxClever, £850m in 2000, but she does not appear to be at the centre of BaFin's findings about potential failings at the bank.
Speculation in the past few days has instead centred on the future of Mr Sengera, and three other directors ultimately responsible for principal finance. They are Adolf Franke, Johannes Ringel and Andreas Seibert.
Ms Saunders has been furious in recent weeks that her German bosses have not supported her more publicly. But Mr Sengera did say last month that structured finance, which includes Ms Saunders' unit, had contributed half of the bank's profits in the past four years.
However, he has also raised the possibility that WestLB will sell off the refinancing business and has asked Goldmans Sachs and Citigroup to value it.Reuse content