LBBW to bolster its capital position

by Richard Kilner

Story link: LBBW to bolster its capital position

German bank, Landesbank Baden-Württemberg (LBBW), has embarked upon a capitalisation plan in a bid to enhance the firm’s competitive edge, which is particularly important amid the present financial crisis and wider global economic difficulties.

Although enjoying an overall solid performance in its key business areas, LBBW has lost €884m (£753.4m) (before tax) due to the global economic turbulence.

Further to this, LBBW is contemplating utilising the guarantee framework offered by the Financial Markets Stabilisation Fund (SoFFin), or using its owners as a funding reserve for a sum around €15-20bn.

A decision regarding the two above possibilities is expected to be reached during December.

At the Owners’ Meeting, a capital increase of €5bn was agreed with the present ownership structure retained.

The extra capital is to subject to approval and is planned for Q1 of next year and will have the affect of raising the tier 1 ratio from 6.8% (the September figure) to 9-10%.