LBBW should incorporate but retain owners - report

FRANKFURT (Reuters) - Germany's largest state-controlled Landesbank, LBBW, does not have to change owners and privatize, but it will have to become incorporated so as to get critical EU approval, a media report said on Saturday.

The decision was the result of a meeting between LBBW and EU Competition Commissioner Neelie Kroes on Friday evening, German newspaper Boerzen-Zeitung reported without citing its sources.

Earlier media reports said the state lender might have to change its ownership, were it unable to guarantee its long-term viability under the current ownership structure.

The newspaper said it was unclear whether the EU had attached any other conditions.

Neither LBBW nor the competition commission commented on the report, the newspaper said.

In July, the EU approved a 5 billion euro ($7.44 billion) capital injection from the state of Baden-Wuerttemberg and gave the ok for the state to offer another 12.7 billion euros in loan guarantees for the largest of the hard-hit German state-controlled lending institutions.

The EU commission allowed for the bailout on condition that the bank undergo a massive restructuring.

The German state of Baden-Wuerttemberg and the Baden-Wuerttemberg savings bank both own stakes of around 40 percent in the bank, while the city of Stuttgart owns just under 19 percent.

Landesbanks, which act as wholesale banks for the local savings banks that control over 40 percent of Germany's retail banking market, are big lenders to companies in their regions and thus tightly tied to the country's economic fortunes.

(Reporting by Tyler Sitte; Editing by Keiron Henderson)