MAY 27, 2003
No investigation for the Bayerische Landesbank
The German justice system has decided that after a preliminary investigation it will not open a formal inquiry into the loans made by the Bayerische Landesbank to the crumbling Kirch empire. The bank, which is controlled by the state of Bavaria, loaned $1.9bn to Kirch, half of which was used to acquire the Formula One group of companies. When Kirch collapsed the stake in F1 passed on to the Bayersiche Landesbank which is now negotiating a deal to hand the shares back to their original owner Bernie Ecclestone. The problem is that in order to do that the bank is going to have to take a huge loss, which could affect the creditworthiness of the bank. It is expected that the only way forward is for Bavaria to agree to put more money into the bank to maintain its credit rating.
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