German shipping bank Norddeutsche Landesbank Girozentrale (NORD/LB) plans to provide financial relief to its subsidiary Bremer Landesbank Kreditanstalt Oldenburg – Girozentrale – (BLB), which posted a huge loss in 2016 amid a challenging shipping market.
Namely, BLB suffered a full-year loss of around EUR 1.4 billion (USD 1.5 billion) in 2016. The reason for the higher loss is the further increased risk provisioning in its portfolio of shipping loans in the worth around EUR 1.6 billion for 2016.
NORD/LB acquired all shares in BLB on January 1, 2017. In connection with this acquisition, NORD/LB and BLB entered into a controlling agreement, according to which NORD/LB is required to compensate BLB for any annual deficit as from the financial year 2017, to the extent this deficit is not compensated by means of a withdrawal from other retained earnings, according to BLB.
Further, NORD/LB issued a letter of comfort to BLB according to which the bank provides that BLB is in a position to meet its obligations.
On January 19, 2017, BLB filed an application with the European Central Bank to obtain a so-called waiver from the application of certain regulatory requirements in respect of BLB’s own funds.
“Currently, an increase of the capital by NORD/LB as well as further measures to stabilize the capital ratios are being prepared,” BLB said in a statement.