It is too early to judge if Germany’s Landesbanks have already been impacted by the loss, in July, of the Anstaltslast and Gewährträgerhaftung state guarantees that infuriated private banks by artificially protecting their triple-A ratings.
Their existing liabilities are grandfathered, and most have in any case extensively pre-funded themselves. As a result, they have yet to be exposed to the full glare of capital market scrutiny by issuing unsecured debt on the basis of standalone ratings.
But when they are, the general consensus among ratings agencies, credit analysts and even competitors is that Landesbank Baden-Württemberg (LBBW) will be the player best prepared to compete without the cocoon of its former state guarantees. “Manageable” was how Standard & Poor’s (S&P) described the loss of the guarantees for LBBW in a report released shortly before their official removal. S&P’s long term rating on LBBW is A+.
If LBBW is well equipped to compete in the post-guarantee environment, that was by no means a foregone conclusion in April 1994, when Siegfried Jaschinski left Deutsche Bank to take up a position as board member at Südwestdeutsche Landesbank.
“To be honest, I was a little bit hesitant about joining a Landesbank back in 1994,” says Jaschinski, who became deputy chairman of LBBW two years ago and chairman of the board of managing directors at the start of 2005.