View from City Road: Lancer Boss uncovers German unease

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The Independent Online
Here in Britain, receivership has too often been the first resort of a bank when a middle-sized industrial customer hits the rocks. In Germany, they are supposed to do things differently.

German banks have for decades been accustomed to sorting out problems in industrial boardrooms - where they are heavily represented - by direct intervention in management and by financial reconstructions, rather than by pulling the plug at the first excuse. The long-term relationship between German banks and industry is widely celebrated.

So what could be more natural for the Bavarian banks than rescuing Lancer Boss's Steinbock subsidiary by calling in another German industrial company to rehabilitate it?

Unfortunately, this is the second recent example to suggest that all is not as it seems in that much- vaunted relationship between German banks and industry.

In the Metallgesellschaft affair, Deutsche Bank and Dresdner Bank tried to force an unfairly constructed rescue plan on French and British bank lenders to the company.

They were asked to take a disproportionately large amount of the equity to be put up for the rescue, even though Metallgesellschaft had been run into the ground under the very eyes of its lead German banks. The foreign banks rebelled against this cosy local arrangement, and got the plan changed.

In the new case, it is the chairman of Lancer Boss who has cried foul. The actions of the Bavarian banks look suspiciously like a fix.

Worse still, the lack of any coherent structure for managing receiverships across European borders will makes it tough to sort this one out in the best interests of the company and its workforce, as well as its shareholders. The strong-arm attempt to arrange a forced sale of the Germany subsidiary could still end with the whole group going to Jungheinrich.