02.07.2012

NORD/LB meets EU capital requirements

On schedule for 30 June 2012, NORD/LB Norddeutsche Landesbank has created the necessary basis for increasing its core tier 1 capital as per EBA definition by at least EUR 1.25 billion within the framework of its capital-boosting programme. The bank's capital-boosting package 2 initiated for this purpose provides for various measures such as capital conversions and profit retention, and is intended for completion by 31 October 2012 as determined by the EBA in December of last year. This means that NORD/LB will then have increased its core tier 1 capital by a total of around EUR 3.27 billion since spring 2011.

"These capital-boosting measures were not made necessary for economic reasons. NORD/LB has pulled through the crisis in sound shape and is exceptionally successful in the market. The measures have actually been taken towards meeting the elevated regulatory requirements on banks in the European Union. However, even if these measures are not necessitated for economic reasons, they are in fact strengthening this bank's financial backbone and making us even more robust", explained Dr. Gunter Dunkel, Chairman of the NORD/LB Managing Board.

In undertaking these capital-boosting measures, NORD/LB is complying with the 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. The ratio achieved by NORD/LB with its measures will be above this minimum limit.

The measures provided for in the currently active capital-boosting package 2 include increasing the equity capital (plus premium) of Bremer Landesbank as fully consolidated subsidiary of the NORD/LB Group by around EUR 608 million in all, doing so by converting silent participations held by the federal state of Bremen (EUR 480 million), Savings banks association in Lower Saxony (SVN) (EUR 51 million) and NORD/LB (77 million). The conversions in question make for a core capital boost of EUR 531 million at the Group level. These capital measures are likely to lead to the following changes in Bremer Landesbank's shareholding structure: The federal state of Bremen's shareholding increases from 7.5 to 41.20 percent, that of NORD/LB drops from 92.5 to 54.83 percent, while SVN will in future have a shareholding of 3.97 percent in Bremer Landesbank.

In addition, the equity capital of NORD/LB as parent company is to be boosted by EUR 400 million via the restructuring of a hybrid bond of the federal state of Lower Saxony. This in turn also means changes in NORD/LB's shareholding structure. As against 31 December 2011 these are: federal state of Lower Saxony 59.13 percent (previously: 56.03), federal state of Saxony-Anhalt 5.57 percent (6.00), SVN 26.36 percent (28.36), Savings banks holding association in Saxony-Anhalt 5.28 percent (5.68), and Special purpose holding association of the savings banks in Mecklenburg-Western Pomerania 3.66 percent (3.94).

The current capital-boosting package 2 comes in the wake of last year's capital- boosting package 1 with a volume of almost EUR 1.7 billion. Together with further previous retained earnings amounting to around EUR 350 million, the overall volume of NORD/LB's capital-boosting programme stands at EUR 3.27 billion in all.

Talks are currently in progress with the EU Commission as to the assessment under state-aid legislation of the various capital-boosting measures, additionally including a subsidiary guarantee facility furnished by the federal states of Lower Saxony and Saxony-Anhalt. "We are having constructive talks and, as we expected, the bank's proven business model is not being called into question. It is acknowledged that NORD/LB is undertaking the measures solely in the interests of meeting the new regulatory requirements determined by the EU and not because of any economic difficulties. However, we cannot yet talk about the results today before they have been arrived at", emphasized Dr. Dunkel.


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PDF-Download:
>Overview of the individual packages of NORD/LBs capital-boosting programme (PDF, 54 KB)

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