Annual Report 2001 - Landesbank Berlin

Management Report
46
1. Overview of the 2001 financial year
The 2001 financial year was characterised in particular by the strategic reorientation
of the Bank, by further adjustments in the lending portfolios and by tackling
the problems of Real Estate Services. From a legal, business, and strategic point of
view, the Group’s structures were revised and an extensive restructuring concept
was developed to return Bankgesellschaft Berlin AG to profitability with lasting
effect.
Restructuring and reorientation • To support the capital increase implemented on
October 4, 2001, the Board of Management drew up a restructuring plan in the
summer of the financial year in question. This plan represented the prerequisite
for a positive decision from the supervisory committees with regard to a capital
increase of up to € 2 billion and the registration of financial aid with the EU authorities
responsible. The cornerstones of this plan were significant restructuring of
the business activities within Real Estate Financing and a reduction of Corporate
and International Banking. In addition, it was decided to restructure and redimension
Real Estate Services. Furthermore, it was planned to combine
the Group’s regional core business in the sense of “one Bank”.
Extensive analyses of the market environment and the financial strengths of the
Bank were carried out on this basis. In November of the financial year under
review, a reworked and concrete version of the reconstruction and restructuring
concept was submitted. From this, a business model for the future orientation of
the Bank was developed. The overall concept was unanimously approved on
November 30, 2001 by the Bank’s Supervisory Board.
The reorientation is aimed at positioning the Bank as a strong regional partner in
the Berlin area. In adjunct to this, activities in both internationally-oriented business
and the presence throughout Germany will be scaled back considerably. Significantly
lower risk assets, a substantially improved risk profile and the sustained
reduction of administration costs are set to safeguard the Group’s operating earnings
power. In future, this will rely on Retail Banking and Regional Corporate
Banking in the Berlin area, whose improvements in efficiency will be vigorously
promoted.
MANAGEMENT REPORT