Remaining 35 staff of Sachsen LB to lose their jobs in Dublin

THE 35 remaining Irish employees of German bank Sachsen LB are to lose their jobs after the bank's new owners announced the closure of its Dublin operation.

The news came as part of a European Commission ruling yesterday that a state rescue plan to save Sachsen LB from collapse last year did not breach EU competition rules.

The Saxon state bank was hit by the subprime fall-out last August and required a €17.3 billion rescue package to cover debts run up by its Dublin subsidiary in off-balance sheet dealings.

In December, another state bank, the Landesbank Baden-Württemberg (LBBW), agreed to buy Sachsen LB, but only after the federal state of Saxony agreed to provide a state guarantee of €2.75 billion to cover any further debts.

Brussels investigators opened an inquiry last February into whether the state guarantee and liquidity line distorted competition, a breach of EU law.

A condition of EU approval was that the LBBW liquidate or sell its Dublin-based Sachsen LB Europe, a move the bank had planned for several months.

"We have to agree on a reduction in business activity at the company that has received the aid to offset the distortion to competition caused by the aid," said Jonathan Todd, spokesman for Competition Commissioner Neelie Kroes.

"The company receiving the aid makes proposals to us and, if we are satisfied that this indeed would constitute a reduction of business activity and that the cut would be sufficient, then we'll go along with that."

In April, LBBW relaunched its newly-acquired subsidiary as "Sachsen Bank", offering services to business and high earners in eastern Germany, Poland and the Czech Republic.

As part of the restructuring LBBW decided to centralise all capital markets business in its Stuttgart headquarters.

As well as closing Sachsen LB's Dublin operations, LBBW will dispose of a leasing subsidiary and two property companies.

LBBW chief executive Siegfried Jaschinski welcomed the decision as "an important step forward".

At the Sachsen LB Europe offices on George's Quay yesterday, employees said the mood was "not great". The outlook for the Irish subsidiary had been bleak for months as at least 15 staff members left.