German savings banks have pulled out of a deal to restructure Bayerische Landesbank , Bloomberg reported on Sunday, citing a person familiar with the talks.
The banks have backtracked on an agreement on their level of contributions toward a restructuring plan that would have included the sale of BayernLB's mortgage lending unit LBS Bayern, the news agency said, citing the person. Spokespeople for the Bavarian savings banks were not immediately available for comment while BayernLB declined to comment.
EU Competition Commissioner Joaquin Almunia in February said that BayernLB had yet to present an acceptable plan to sell assets and revamp its business model to comply with EU state aid rules more than three years after its bailout.
BayernLB ran into trouble in 2008 due to risky investments in the financial crisis, forcing its state owners, the state of Bavaria and the Association of Bavarian Savings Banks, to pump in billions of euros.
On Friday, Theo Zellner, president of Bavaria's savings banks, said an agreement between the EU and Bavarian savings banks regarding the scope of commitment in BayernLB's rescue efforts was possible in March, though ambitious.
"This rather looks like tactics on the last stretch of negotiations," a source close to BayernLB told Reuters on Sunday with regard to the news report.
A second source close to the bank said he was still "very positive" there would be some sort of agreement between the EU and BayernLB's owners shortly.