German Savings Bank Association in Landesbank Berlin Acquisition; Landmark Deal for German Financial Sector

Cleary Gottlieb represented Deutscher Sparkassen- und Giroverband ö.K. (the German Savings Banks Association widely known as DSGV) in its acquisition of the State of Berlin’s 81% share in Landesbank Berlin Holding AG and NORD/LB’s 10% Landesbank stake. Cleary Gottlieb also represented DSGV in the acquisition financing, which came from a consortium of WestLB, NORD/LB and Sachsen LB.

The deal was signed on June 15, and is awaiting the approval of Berlin’s Parliament and clearance by regulatory authorities.

The fiercely contested acquisition (which at one point involved some 19 bidders, including both private equity buyers such as Cerberus, Lonestar and JC Flowers, and banks like Commerzbank, HVB/Unicredit and German Landesbanken) was headline news in Germany, and is one of the largest domestic deals on record in the German finance sector.

Landesbank Berlin, previously known as Bankgesellschaft Berlin, nearly collapsed in 2001, when a revaluation of its real estate-related liabilities wiped out its capital. The European Commission had approved a € 23 billion bailout by the State of Berlin, on the condition that it divest its stake by the end of 2007. The Commission monitored the auction process closely to ensure that it was open, transparent and non-discriminatory.

DSGV indirectly represents more than 400 German savings banks, one of the largest groups of financial institutions of the world. These banks serve almost 50 million customers in Germany, among them 1.9 million customers in Berlin.