Reuters reports that the German government is prepared to inject up to EUR 4 bln into WestLB but they do not plan on taking a controlling stake. The deal is not yet legally binding and won’t be finalized until mid-December. The maximum potential loss for WestLB foreseen as EUR 17.5 bln, Reuters reports.
EUR/USD is steady at 1.4954 as details have been slowly leaking out the last few hours. If WestLB is a one-off, it won’t be too disruptive for the EUR. If it is seen as the first of a wave of bank recapitalizations, big declines could be seen into year-end.
