BERLIN, Oct 26 (Reuters) – The German government is in talks with Siemens Energy about state guarantees, a government source said on Thursday, after major setbacks at the group stemming from its wind division, which has booked billions in losses amid quality issues.

Both the German economy ministry and Siemens Energy declined to comment.

Quality problems emerged this year at the power engineering company’s wind unit Siemens Gamesa centred on rotor blades and gears in newer onshore wind turbines, drawing the ire of top shareholder and former parent Siemens AG (SIEGn.DE).

Due to the losses, Siemens Energy fears it will struggle to secure guarantees from banks, and has approached the government and Siemens to obtain a guarantee framework, according to business news weekly WirtschaftsWoche.

WirtschaftsWoche, which first reported the talks along with Spiegel magazine, said Siemens Energy is seeking up to 15 billion euros ($15.81 billion) in guarantees.

The German state would assume liability for 80% of an initial 10 billion euro funding tranche, while banks would be liable for the remaining 20%, WirtschaftsWoche reported.

A spokesperson for Siemens AG, which according to the report was being asked to guarantee a second tranche of the remaining 5 billion euros, declined to comment. Siemens remains an anchor investor in Siemens Energy, retaining a 25.1% stake.

In August, Siemens Energy said the problems at Gamesa would be the main factor inflating its net loss in 2023 to 4.5 billion euros, more than six-fold year-on-year.

Spiegel magazine cited sources close to the company saying the losses might turn out to be higher.

Top managers at Siemens Gamesa, the world’s largest maker of offshore wind turbines, have been replaced without resulting improvements in profitability.

Globally the company operates 79 sites, including sales and service offices, research and development centres, and 15 factories to produce components such as blades.

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