Bayerische Landesbank, Germany’s
second-biggest state-owned lender, started repaying government
aid it received during the financial crisis.

BayernLB paid 350 million euros ($452 million) to the state
of Bavaria for aid received in 2008, its first payment, the
Munich-based lender said in an e-mailed statement today.

The repayment “is an important signal to Bavaria’s
taxpayers,” Bavarian Finance Minister Markus Soeder said.
“This is also the result of the changeover to a much smaller
but more customer-oriented and lower-risk business model.”

BayernLB, led by Chief Executive Officer Gerd Haeusler, got
European Commission approval for its government bailout in July.
As part of the agreement, BayernLB has to repay 5 billion euros
in state assistance by 2019 and cut its balance sheet in half
from the level of 2008. BayernLB also agreed to avoid
acquisitions and dividend payments and to sell assets including
mortgage-lending unit LBS Bayern and real estate unit GBW AG.

BayernLB, which announced plans in 2008 to refocus
operations and reduce the workforce by 2013, began the process
of selling a 92 percent stake in Munich-based GBW last month.
The company has said it expects to complete the sale in the
second quarter of next year. GBW owns more than 32,000
apartments in Bavaria, with about two-thirds located in Munich,
Nuremberg and Regensburg.

“Numerous companies” signaled their interest in GBW by a
Nov. 9 deadline, and BayernLB expects indicative bids before
Christmas, it has said.

Business Split

In a separate statement today, the bank said it will
realign its business to separate activities it intends to keep
from those being shut down or sold. BayernLB also appointed
Michael Buecker, 50, to the management board, effective Feb. 1,
to replace Jan-Christian Dreesen, who is leaving to become chief
financial officer of soccer-club FC Bayern Muenchen. Buecker has
run Commerzbank’s asset-management subsidiary Commerz Real AG
since 2009.

BayernLB agreed earlier this year to sell its DKB
Immobilien AG real estate unit to Hamburg-based TAG Immobilien
AG for 160 million euros.

BayernLB last week reported a 78 percent rise in nine-month
pretax profit to 271 million euros. Losses at Budapest-based MKB
Bank, a unit that’s slated for eventual sale, shrank to 131
million euros in the period from 186 million euros a year ago.

To contact the reporter on this story:
Oliver Suess in Munich at
osuess@bloomberg.net

To contact the editors responsible for this story:
Frank Connelly at fconnelly@bloomberg.net
Edward Evans at eevans3@bloomberg.net