West LB contests Fitch downgrade
DÜSSELDORF - State-owned German bank West LB is considering suing rating agency Fitch Ratings after it downgraded the bank's individual rating from D/E to F owing to claims the bank would have been bankrupt without state aid.
West LB has announced it is likely to suffer a full-year loss of €1 billion for 2007, due to subprime exposures. The bank claimed Fitch's rating was without basis and lacked any knowledge of the relevant internal information. West LB's owners recently agreed to provide €2 billion in capital to the bank.
Fitch has continued to rate WestLB even without mandate from the bank, claiming strong investor interest. Rival rating agency Moody's - which has a contractual relationship with the German bank - claims West LB has a satisfactory liquidity level.
WestLB recently publicised merger plans with Landesbank Hessen-Thüringen, which would form Germany's largest state-owned bank. The German state of North Rhine-Westphalia owns about 38% of West LB, while the Westphalia-Lippe and Rhineland savings banks associations collectively control over 50%.
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