BayernLB and Helaba, two German publicly-owned banks, have announced the end of their cooperation concerning two private banks in Luxembourg and Zurich.

BayernLB, the Landesbank of Bavaria, and Helaba, the Landesbank of Hesse and Thuringia, have swapped the shares of their joint subsidiaries Banque LBLux in Luxembourg and LB(Swiss) Privatbank in Zurich, the firms said in a statement.

During the credit crises, BayernLB has come into turbulences and had to receive capital from the state of Bavaria, which now owns more than 90 per cent of the bank.

It has been expected that the Bavarian bank might soon face EU regulations, forcing the firm to decrease some of its holdings. The deal with Helaba is seen as a first step towards this downsizing.

If the deal will be approved, BayernLB will divest its 50 per cent interest in LB(Swiss) while Helaba will give up its 25 per cent (plus one share) ownership of LBLux, the firms said.