Collective profits from Landesbanks have reached their highest level since the onset of the financial crisis, showing a measure of recovery for a sector among Germany’s biggest recipients of bank bailouts.

The regionally controlled banks lend mainly to the corporate and public sectors and mostly rely on market borrowing for their funding.

Stabilising the sector became one of the most urgent issues for Germany’s government and financial regulators after four of the six largest Landesbanks by assets needed state aid.

Landesbank Baden-Württemberg, largest by assets, is expected to confirm preliminary 2012 results showing almost €400 million of net income compared with €86 million the previous year.

Together the five remaining banks in the sector have increased net income from about €800 million in 2011 to €1.4 billion in 2012, which includes a €124 million net loss reported by HSH Nordbank. The government welcomed signs of recovery. Chancellor Angela Merkel said the sector had been “as far as possible put on a good footing”.

– (Copyright The Financial Times 2013)