DUSSELDORF, Germany, Sept. 20 (UPI) -- German bank WestLB said it was considering a merger with landesbank BayernLB, which would put the bank in compliance with a government bailout agreement.
Both BayernLB and WestLB were given billions of dollars in government aid during the financial crisis.
The European Union then ordered WestLB, which lost $690 million in 2009, to find a new owner.
A merger with BayernLB, which lost $3.4 billion last year, would create the third largest bank in Germany and possible trigger a round of mergers by other public banks.
Sources said WestLB is also discussing a merger with Helaba and Deka Bank in Frankfurt and Berliner Landesbank, but a WestLB spokesman only confirmed the discussions with BayernLB, The New York Times reported Monday.
BayernLB is WestLB's first choice for a merger and the spokesman, Eberhard Roll, said the bank was only confirming that discussion because the talks, although incomplete, had made significant progress.
"We welcome in principle all talks that could lead to progress in consolidation of the landesbank sector," the Finance Ministry said in a statement.
The landesbanks in Germany are owned by state governments often in conjunction with savings banks, the Times said.
