The state government of Saxony in Germany has agreed to provide a €2.75bn ($4bn) guarantee to part-cover the investments of Sachsen LB's structured investment vehicles and conduits, paving the way for the bank's takeover by Landesbank Baden-Württemberg.

The takeover, which was first announced in August, had been under threat over disagreements in the amount of risk LBBW was willing to absorb. German press reports indicated earlier this week that LBBW was looking for a guarantee from the Saxon government of up to €4.3bn.