Annual Report 2001 - Landesbank Berlin

• At the end of January 2002, the Federal Republic of Germany submitted an application to the European
Commission in Brussels to authorise the contributions towards reconstruction from the State of Berlin as
restructuring aid. These contributions take the form of an injection of capital and protection of the Group
from the substantial risks from Real Estate Services. The application also covers the restructuring programme
for the Bankgesellschaft Berlin Group, approved in December of the previous year. On April 9,
2002, the EU Commission started formal proceedings. The injection of capital by the State of Berlin had
already been approved for a limited period in July 2001.
The stabilisation and reconstruction measures were noticeable in the 2001 annual financial statements:
despite continued significant risk provisionings in the lending business, the net loss for the year within the
Group was limited to €112 million, mainly due to the protection from risks from Real Estate Services. Without
this contribution to reconstruction from the State of Berlin, Bankgesellschaft Berlin would have had to report
a consolidated loss in the billions, as it did in the previous year. The 2001 annual financial statements contain
additional special factors that both positively and negatively impacted the profit and loss account. These special
factors were largely directly associated with the reconstruction and reorientation measures.
The Bank will once again not post a profit this year. In subsequent years, priority will be given to strengthening
reserves ahead of resuming dividend payment in view of the recent reported loss. In addition, it must be
taken into account that the State of Berlin receives a contractually agreed advance dividend distribution as consideration
for its substantial financial contributions to the stabilisation and regeneration of Bankgesellschaft
Berlin. This will be paid as soon as the Group posts a profit and if certain equity ratios are exceeded. Furthermore,
the State of Berlin is to be paid a guarantee commission amounting to €15 million per annum for the
risks taken on from real estate transactions.
Dear Shareholder,
Following implementation of the reconstruction concept, our Bank will have a new face and will see itself in
a new light:
• We intend to considerably reduce the complexity of the Group and make it easier to manage. Consequently,
the Boards of Management of Bankgesellschaft Berlin and Landesbank Berlin are now largely made up of
the same individuals, for example. Centralised units such as Risk Management, Finance, Controlling and
IT Organisation/Operations are now universally responsible for both banks, thus making responsibilities
clearer. Decision-making is becoming more homogenous and transparency is clearly improving.
2 LETTER TO SHAREHOLDERS