Annual Report 2002 (pdf, 1319K) - WestLB

Chairman’s Statement
“
In order to prepare well in advance for the period after the
elimination of the state guarantees, the Bank embarked on
an extensive programme of measures aimed at reducing costs
and enhancing efficiency.
The extremely difficult market environment had a significant impact on WestLB AG’s
results in 2002. At the same time we took and implemented important strategic decisions
for the future and above all made good progress in reducing our cost burden.
As a result of the sluggish economy and the slump on the equity markets, the operating
result of the WestLB Group fell to € 366 million. The Bank posted a net loss for the
year before taxes of € 1.668 billion. This was primarily caused by significantly higher
risk provisions, which related to the weak development of the economy and to a large
extent to cases of fraud and balance sheet manipulation. Moreover, we established a
general risk allowance of over € 200 million as additional provision for risks. We also
incurred substantial restructuring expenses. The net loss for the year will be met from
the Group’s reserves.
With the timely implementation of the parent-subsidiary model, the Bank successfully
managed a major challenge. The former Westdeutsche Landesbank Girozentrale has
been split up into three independent institutions: Landesbank NRW, LBS Westdeutsche
Landesbausparkasse and WestLB AG. By concentrating its commercial activities within
WestLB AG, the Bank has clearly positioned itself and laid the foundations for its successful
development when institutional liability and guarantor liability are finally eliminated.
The dispute with the European Commission concerning alleged state aid as a result
of the integration of the Wohnungsbauförderungsanstalt (Wfa) into WestLB in 1992
remains unresolved. The European Court reversed the decision of the European
Commission on the issue of state aid on the grounds of inadequate substantiation,
”