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Last Updated: Monday, 21 January 2008, 10:55 GMT
WestLB expects billion euro loss
WestLB office in Germany
WestLB is the third largest regional German bank
The German bank WestLB has said how much it expects to lose from its exposure to US sub-prime mortgages and unauthorised stock market trades.

It expects to make a net loss of 1bn euros ($1.45bn; 744m) and a similar amount in write-downs.

The bank is now reported to be planning to cut up to 2,000 jobs and may merge with a rival state lender

Bank of China is also reported to be about to make big write-downs from its exposure to US sub-prime mortgages.

The South China Morning Post suggested that Bank of China may make a loss for 2007 because of the debt, which is based on repackaged home loans made to people with inferior credit records or unpredictable incomes.

Record default rates on such loans because of rising interest rates meant the debt had questionable value.

German banks have been among the worst hit with IKB and SachsenLB having particularly serious problems.

WestLB's announcements followed a Sunday meeting of its owners - the state government of North Rhine-Westphalia and local banks.

Jobs threatened

WestLB's owners agreed that they will come up with the money to cover its losses.

Bundesbank President Axel Weber also attended the meeting in Duesseldorf.

The daily Rheinische Post is reporting that the bank will cut 2,000 jobs in Germany and abroad, which is about one third of its total workforce.

It also said that the owners are keen on a merger with the rival state lender Helaba.

In addition to its sub-prime losses, WestLB has suffered from losses due to unauthorised trading.

Germany's financial regulator ruled last year that the bank's supervisory board had not been properly informed about heavy losses made while trading in shares in German companies including Volkswagen, Metro and BMW.

WestLB sacked two traders whom it accused of market manipulation and against whom criminal charges were subsequently brought.

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