OREANDA-NEWS. January 5, 2012. Having conducted an examination under state-aid legislation considerations, the EU Commission has today approved the capital measures for NORD/LB Norddeutsche Landesbank announced in April by the federal state of Lower Saxony and the owner-Savings Banks involving a total amount of EUR 1.67 billion. "As announced, these capital measures will also constitute the major part of our capitalization programme via which we will meet the Core Tier 1 capital ratio of at least 9 percent as determined at the EUR summit in October", explained Dr. Gunter Dunkel, Chairman of NORD/LB's Managing Board.

The capital measures mean that NORD/LB's equity capital will be boosted by EUR 1.67 billion in all. This figure includes the conversion of silent participations and other capital instruments to an amount of EUR 1.07 billion, besides Lower Saxony's injection of additional capital amounting to EUR 500 million. The Lower Saxony Sparkassenverband (Association of Savings Banks) is contributing around EUR 78 million by way of a capital conversion, while the Sparkassen savings banks in Saxony-Anhalt and Mecklenburg-Western Pomerania are boosting NORD/LB's equity capital by a further EUR 22 million. These measures mean that the bank's ownership structure has changed to the following effect: Federal State of Lower Saxony: 56.03 (previously: 41.75) percent, Federal State of Saxony-Anhalt: 6 (8.25) percent, Association of Savings Banks of Lower Saxony: 28.36 (37.25) percent, Holding Association of Savings Banks of Saxony-Anhalt: 5.68 (7.53) percent, and the Special Purpose Holding Association of Savings Banks of Mecklenburg-Western Pomerania: 3.94 (5.22) percent.

The capital measures were approved by the bank’s owners and resolved with the force of law by the Lower Saxony state parliament during the course of this year. "The capital measures are in line with market conditions, our bank is in a healthy economic state and, even in a difficult market environment, profitable, and we have come through the financial crisis without requiring or calling for government aid. There is no economic necessity whatsoever for the capital measures. These are solely being undertaken to meet the regulatory requirements set by the EBA and the EU summit. We are therefore confident that the capital measures will not be made subject to any further terms and conditions", underlined Dr. Dunkel. NORD/LB has agreed with the European Commission to submit its capital-boosting programme including the capital restructuring concept via which the bank's equity capital will be adapted to meet the requirements set by the EBA and Basel III.

The upshot is that the capitalization requirement published on 8 December 2011 towards fulfilling the Core Tier 1 capital ratio of at least 9 percent as determined by resolution at the EU summit in October has for the most part already been fulfilled. As regards the remaining capitalization requirement, the bank is currently clarifying the final details with its owners, and will subsequently be tabling a package of measures, announced Dr. Dunkel. This package will above all include further capital conversions as well as profit retainment. Consideration is also being given to the sale of investments. "As stipulated, we shall be meeting the elevated capital requirements set at the EU summit by mid-2012", asserted Dr. Dunkel. At the same time, he announced that NORD/LB's net profit for the year will be up on last year's figure in spite of what is undoubtedly a difficult economic environment.