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CMS advises Federal State of Lower Saxony on EUR 3.6 billion capital injection for NORD/LB

23/12/2019

Hamburg – The current owners of NORD/LB and the German Savings Banks Association (DSGV) have together injected a total of just over EUR 3.6 billion into the public-sector bank to boost its capital position. In addition to Lower Saxony, the parties involved were the Federal State of Saxony-Anhalt, the Lower Saxony Savings Banks Association, the Saxony-Anhalt Savings Banks Holding Association (Sparkassenbeteiligungsverband) and the Mecklenburg-Western Pomerania Special Purpose Savings Bank Holding Association (Sparkassenbeteiligungszweckverband).

The DSGV had established back in January that NORD/LB needed support. As a result of the subsequent negotiations, NORD/LB’s share capital was increased by EUR 2.835 billion and subscribed by the existing owners and the DSGV. The Federal State of Lower Saxony has taken a stake of EUR 1.502 billion via two state-owned investment vehicles. In addition, Lower Saxony has pledged various capital relief measures with a total equity effect of EUR 800 million. These capital relief measures include providing financial guarantees for NORD/LB loan portfolios and the acquisition of NORD/LB’s shares in Porzellanmanufaktur Fürstenberg GmbH and Toto-Lotto Niedersachsen GmbH. The EU Commission approved the capital increase on 5 December of this year. Closing took place today.

A CMS team headed by lead partners Dr Christian von Lenthe and Dr Henrik Drinkuth again advised the Federal State of Lower Saxony on all legal aspects of the capital increase. Negotiating the contract documentation and working with banking regulators to gain approval for the capital relief measures played a key role in the process. The team also advised on the EU Commission procedure to establish that the assistance for NORD/LB did not constitute state aid. Other relevant aspects of the advice included merger control, conducting owner control procedures, the complex tax issues raised by the capital injection as well as financing of the measures. The team also assisted in implementing a tender procedure for monitoring services in connection with guarantees provided by the Federal State of Lower Saxony for loan portfolios. The parliamentary proceedings and the special public-law aspects and requirements of the transaction were a further focus of advice.

NORD/LB has headquarters in Hanover, Braunschweig and Magdeburg and describes itself as a leading German commercial bank, with total assets of EUR 154.8 billion. Its core business segments include structured finance in the energy and infrastructure sector, ship and aircraft finance, corporate client business, commercial real estate finance, capital market business and private and commercial client business, including private banking. In the autumn of 2018, NORD/LB launched a formal bidding process after the sale of shipping loans gave rise to a need for new equity capital at the public-sector bank.

CMS Germany

Dr Christian von Lenthe, Lead Partner
Dr Henrik Drinkuth, Lead Partner
Dr Anja Wiedemann, Senior Associate
Markus Wrogemann, Senior Associate
Charlotte von der Heydt-von Kalckreuth, Senior Associate
Hanna Stukenbrock, Associate, all Corporate/M&A
Dr Michael Bauer, Partner
Dr Björn Herbers, Counsel
Roxana Mina Kruse, Associate, all Competition & EU
Dr Kerstin Block, Partner
Philipp Melzer, Partner
Dr Joachim Kaetzler, Partner
Jörg Baumgartner, Counsel
Moritz Gerstmayr, Senior Associate
Till Komma, Senior Associate
Ivonne Kahlke, Senior Associate
Dr Dennis Ivanovic, Associate, all Banking & Finance
Dr Hermann Müller, Partner
Dr Rajiv Chandna, Counsel
Dr Jan Niklas Gestefeld, Senior Associate
Karima Sameri, Senior Associate, all Real Estate & Public
Dr Heino Büsching, Partner
Dr Isabelle Holly, Counsel
Dr Olaf Thießen, Principal Counsel
Dr Toufic Schilling, Associate, all Tax

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