A4 für Copyshop GB.indd - Bayerische Landesbank

52 BayernLB – our company
} BayernLB helps
savings banks
to control credit
risks with
“S-Bayern-Basket-I”
transaction
} Cooperation in
Sparkassen-Finanzgruppe
intensified
In 2004, BayernLB positioned itself as risk clearing house for the Bavarian savings
banks for the first time. Thus, in the context of a transaction called “S-Bayern-Basket I”,
the individual credit risks of the Bavarian savings banks involved were transferred to
a Special Purpose Vehicle by means of a credit default swap (CDS). There, they were
pooled and then sold back to these savings banks via the issue of a credit linked note
(CLN). BayernLB acted as arranger and administrator for this deal. An “S-Basket” trans-
action to be carried out at national level is currently in the pipeline. Savings banks can
use products of this kind to control risks and discharge economic capital, in the con-
text of sound portfolio management. This creates enhanced opportunities for SME
financing that is not suitable for trading on the capital markets.
The withdrawal of the state guarantees in July 2005 will increase the price of uncov-
ered funding for public-sector credit institutions. For this reason, BayernLB, in collabo-
ration with the Association of Bavarian Savings Banks and the Bavarian savings banks
themselves, is currently developing models dedicated to new issue business. These
models involve using covering assets from the balance sheets of the savings banks in
order to exploit favourable funding options. This is expected to generate considerable
value added for the Sparkassen-Finanzgruppe Bayern. Some of these models envisage
the transfer of covering assets from Bavarian savings banks to BayernLB’s registers of
cover. BayernLB then issues covered bonds (pfandbriefe) based on this cover, and can
thus transfer the liquidity generated to the Bavarian savings banks as required.
Business development
Performance in 2004 was characterised by even closer cooperation within the Spar-
kassen-Finanzgruppe Bayern. Bavarian savings banks and their customers take advan-
tage of virtually all of BayernLB’s broad range of products and services. A pleasing
increase in cooperation is evident in all of the Bank’s core businesses.
Portfolios in the savings banks’ proprietary securities trading were up slightly, despite
an unfavourable investment environment. Significant portfolio increases were achieved
in structured products and equity investments, thanks to the exploitation of diversifica-
tion opportunities and alternative investments.
In securities business with customers of the Bavarian savings banks, BayernLB’s private
asset management activities developed particularly well. Furthermore, in collaboration
with the centre of competence for asset management, two new price information sys-
tems were selected to bolster Sales Support, while increased usage of a portfolio man-
agement system was promoted.
In corporate customer and real estate business, a strategy coordinated with the Bavar-
ian savings banks helped to increase transparency and successfully implement coop-
erative market development. In the corporate customer segment, demand from the
Bavarian savings banks for BayernLB’s services as a syndicating partner picked up
significantly from mid-2004. This segment was marked by both the general cyclical
trend and the individual risk profiles of the Bank’s SME corporate customers. Requests
for syndicated loan business from the Real Estate Business Area once again increased