EU approves capital-boosting measures of NORD/LB
The EU Commission has as expected today approved the capital-boosting measures of NORD/LB Norddeutsche Landesbank. “This is final confirmation that NORD/LB meets the increased capital requirements of the EU in full and on time,” explains the Chairman of the Managing Board of NORD/LB, Dr. Gunter Dunkel.
The basis for the approval is a catalogue of commitments which NORD/LB and the EU Commission have agreed on. These commitments relate to different business segments and define target customers, business volumes and areas of focus for business regions. “NORD/LB’s proven business model is not called into question by these commitments, on the contrary it is confirmed and strengthened by them," explains Dunkel. “The commitments and the agreed ratios primarily represent a binding obligation to reliably continue on the path we have taken.”
This also applies for the bank’s strategic plan for the next few years, which envisages for example a controlled, moderate reduction of total assets and risk assets, the continual retention of profits and a limitation of administrative expenses. “This is in line with the ideas of the EU Commission. Accordingly, we have been able to make binding commitments here as well. The Commission acknowledges that we are not in need of support and have weathered the financial crisis by our own efforts. We have pursued the capital-boosting measures not out of economic necessity, but because we want and have to meet the increased EU requirements.”
As most of the commitments represent a confirmation and continuation of the bank’s business model and strategic plan, only a few adjustments are necessary, for example the closure of small representative offices in Mumbai, Beijing and Madrid while at the same time continuing the operation of the major foreign branches. This does not affect the business model though. It has also been agreed that the anticipated dividends for the next years will not be distributed to the owners, but will initially be allocated to the bank’s retained earnings. They may be distributed at a later date, if the bank’s earnings and capital position continues to develop according to plan.
The various capital measures and associated commitments are formally summarised in a so-called restructuring plan. “Restructuring means in our case a change in the composition of our equity which has significantly boosted our core tier 1 capital. This boost has made NORD/LB even more robust and crisis-proof. The structure of the bank and its business model will not changed as a result of this. We can and will continue to resolutely and confidently pursue our course.”
The capital-boosting measures which the EU Commission has approved today include the Capital-Boosting Package 1 with a volume of € 1.67 billion, which was implemented at the end of last year, the Capital-Boosting Package 2 with a volume of around € 1.25 billion, for which all of the legal requirements have already been met and which will be implemented by mid-August, and a subsidiary guarantee framework for the states of Lower Saxony and Saxony-Anhalt.
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