August 12, 2015 / 4:48 PM / 2 years ago

UPDATE 1-Portigon CEO steps down amid strategy disagreement

(Adds comments from supervisory board head on reasons for departure, future of unit)

DUESSELDORF/FRANKFURT, Aug 12 (Reuters) - The chief executive of Portigon AG, the successor to broken-up German state bank WestLB, has resigned over differences of opinion within the company over what to so with its financial services unit.

Kai Wilhelm Franzmeyer, who had been CEO since April last year, was stepping down from the board with immediate effect, Portigon said in a statement on Wednesday.

Portigon's predecessor WestLB was bailed out by its public-sector owners after a series of trading scandals and losses. The European Commission approved the bailout only under strict conditions.

Franzmeyer was in favour of privatising Portigon Financial Services (PFS), but the supervisory board wanted to merge it with the EAA, the 'bad bank' of WestLB, Portigon Chairman Friedhelm Plogmann told journalists.

Plans to sell the unit were put on ice in the middle of last year due to unfavourable market conditions.

Plogmann said a sale seemed too risky and the merger of PFS with EAA should now take place on Sept. 15.

Portigon's management board has been in flux. The resignation of a board member in December cut the board to just two people.

The company's supervisory board would decide on a successor to Franzmeyer in the coming days, the statement said.

The state of North Rhine-Westphalia, which owns Portigon, is under time pressure because the EU Commission has demanded the PFS unit, which specialises in dealing with bad bank assets, be sold or possibly wound down by 2016. (Reporting by Matthias Inverardi and Jonathan Gould; Editing by Mark Potter)

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