Lower Saxony's Prime Minister David McAllister and Dr. Gunter Dunkel: "NORD/LB can continue its successful development"
HANOVER. David McAllister, Prime Minister of the federal state of Lower Saxony, was in Brussels today with Dr. Gunter Dunkel, Chairman of the NORD/LB Managing Board, for a meeting with EU Competition Commissioner Joaquín Almunia concerning the assessment under state-aid legislation of the latest capital boosting measures undertaken by NORD/LB Norddeutsche Landesbank. As Mr. McAllister emphasised after the meeting, agreement was reached on the essential elements of an authorization on the part of the EU Commission. He now anticipates that a decision will already be taken at the Commission's meeting on 25 July 2012.
Mr. McAllister said: "The EU Commission acknowledges that NORD/LB is undertaking the current capital-boosting measures purely for the purposes of meeting new regulatory requirements set by the EU. The main issues have now been clarified, and all that remains is for the details to be concluded. As regards the compensatory measures from the viewpoint of state-aid legislation, we are sure that a sound and workable outcome will be found for the bank. NORD/LB will be able to continue its successful development on the basis of its proven business model in the future as well."
The Prime Minister also emphasised: "In NORD/LB we have a strong bank which has weathered the financial crisis by its own strengths and efforts as only few banks have. Indeed, the last fiscal year saw it register a record result. Even if the capital-boosting measures are not necessitated for economic reasons, they are in fact making our bank even stronger. These are certainly not easy times for the owners of Landesbanks. We, on the other hand, are pleased to have in NORD/LB such a solidly based, successful bank which is undoubtedly worth every effort on our part. Lower Saxony needs NORD/LB. The bank is after all among the world's leading financiers of ship and aircraft and, in Germany, of renewable energies. It is also the biggest individual financier in the agricultural sector."
The Chairman of NORD/LB's Managing Board, Dr. Gunter Dunkel, said: "The bank's proven business model is not being put in question, so there is no reason to expect any radical measures." The EU – continued Dr. Dunkel – has been given a detailed insight into the bank's strategic planning for next year, which for example provides for a controlled reduction of the balance sheet total and risk-weighted assets, continuous retention of earnings, a sharpening of the target customer definition, and strategic focussing and control of new business. "The EU's ideas and expectations are in accord with these measures, and we shall be giving the EU Commission concrete commitments on them", stressed Dr. Dunkel.
In undertaking these capital boosting measures, NORD/LB is complying with a resolution adopted at the EU summit in October 2011 to the effect that large European banks must have a core tier 1 ratio (as per EBA definition) of at least nine percent until further notice. This definition blanks out a considerable portion of the regulatory core capital. Under prevailing supervisory requirements NORD/LB already has a core tier 1 ratio of 10.2 percent and an equity ratio of 13.4 percent.
The current capital boosting measures include increasing NORD/LB's equity capital by restructuring a hybrid bond of the federal state of Lower Saxony, besides which the equity capital of Bremer Landesbank as fully consolidated subsidiary of the NORD/LB Group is being increased by conversion of silent participations held by the federal state of Bremen, Sparkassenverband Niedersachsen and NORD/LB. In all, NORD/LB's core tier 1 capital has been increased by around EUR 3.3 billion in the course of the past two years.
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