WestLB looks to dispose of principal finance unit

The German bank, WestLB, has admitted publicly for the first time that it is considering selling its principal finance unit, the division led by Robin Saunders that has a number of significant property holdings throughout the UK. The principal finance unit has been one of the main factors behind WestLB´s slide into loss, following the problems that beset the bank´s lending to BoxClever, a UK television leasing company.

Although the bank played down the likelihood of a sale in order to avoid looking like a distressed seller, acting Chief Executive Johannes Ringel said that the company was 'striving for a medium-term sale.'

WestLB is believed to have retained Goldman Sachs to look at strategic options for the division, although the BoxClever debt is unlikely to form part of the divestment.

The unit´s property assets include the Odeon cinema chain, acquired earlier this year as part of a consortium that also included the investor, Robert Tchenguiz; a stake in high street retailer, Bhs; and the Pubmaster chain of pubs.

Saunders herself, who many have blamed for the problems surrounding the BoxClever deal, still wants to buy out the unit´s investment portfolio. Although Saunders is currently on holiday, her spokesperson confirmed: 'Her position hasn´t changed. It´s why she stayed at the bank.'

Earlier this year, Saunders had financing in place when WestLB was expected to make a quick disposal. She would rather buy the unit as a whole rather than see it sold off piecemeal.

Saunders is reportedly prepared to buy out the equity, which she has estimated at between £100m and £200m, alongside an unspecified portion of the debt, estimated at £2bn-£3bn.

Although WestLB indicated that no decision had yet been made, sources close to the bank believe that a break-up looks likely. Other parties understood to be eyeing the portfolio include Lehman Brothers and Citigroup, plus several private equity houses.

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