Nord/LB: Savings banks agree to capital injection

01/02/2019

The German savings banks have agreed to inject missing capital into the foundering Norddeutsche Landesbank (Nord/LB). According to an ad hoc announcement by Nord/LB and its subsidiary Deutsche Hypo, the owners of Nord/LB welcome a solution proposed by the savings bank umbrella organization DSGV, and intend to pursue it “as a matter of priority”. No details were disclosed about the agreement. According to insiders, €1.2bn is to come from the support fund of the state-owned banks (“Landesbanken”) and savings banks, as well as from the savings banks affiliated with Nord/LB. The state of Lower Saxony, the majority owner of Nord/LB, is expected to raise a further €2.5bn. In the event of a public rescue, the current bidding process would become obsolete. The private equity firms Cerberus and Centerbridge are said to have submitted a joint bid for shares in Nord/LB, with plans for the institution to exit crisis-ridden ship financing, but continue with its profitable real estate financing.


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