Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank)
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Landeskreditbank
Baden-Wuerttemberg - Foerderbank
(L-Bank)
Primary Credit Analyst:
Anna Lozmann, Frankfurt (49) 69-33-999-166; anna.lozmann@standardandpoors.com
Secondary Contact:
Thomas F Fischinger, Frankfurt (49) 69-33-999-243; thomas.fischinger@standardandpoors.com
Table Of Contents
Major Rating Factors
Rationale
Outlook
Related Criteria and Research
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 1
1381136 | 301748190Landeskreditbank Baden-Wuerttemberg -
Foerderbank (L-Bank)
Major Rating Factors
Strengths: Counterparty Credit Rating
• "Almost certain" likelihood of support from the sole owner, the State of AAA/Stable/A-1+
Baden-Wuerttemberg.
• Role as sole state development bank and benefits from a threefold state
guarantee.
• Stable legal framework for operations.
• Comfortable liquidity and funding.
Weaknesses:
• Business model set by public policy mandate.
• Low lending margins in core business, reflecting the bank's developmental role.
Rationale
The ratings on Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) are equalized with the ratings on the
bank's owner and guarantor, the German State of Baden-Wuerttemberg. This reflects Standard & Poor's Ratings
Services' opinion that there is an "almost certain" likelihood that Baden-Wuerttemberg would provide timely and
sufficient extraordinary support to L-Bank in the event of financial distress. We have not assessed a stand-alone credit
profile for L-Bank in view of its close link to the state and its business model, which is based entirely on state
guarantees.
L-Bank is the sole development bank in Baden-Wuerttemberg and has a mandate to implement the state government's
economic and social development policies. The bank is the second-largest of Germany's 18 regional state development
banks and had about €71 billion in assets at year-end 2013. L-Bank's business model is based on its public policy
mandate. The regional focus of the bank's development activities is Baden-Wuerttemberg.
L-Bank's business profile is oriented toward residential mortgage lending, lending to small and midsize enterprises,
infrastructure finance, and public-sector lending. The bank's promotional activities take the form of subsidized loans
and grants, which are generally determined by state subsidies and contributions from its own profits.
L-Bank does not take customer deposits and relies on wholesale funding. However, because of state guarantees and its
ownership structure, the bank has a comfortable funding and liquidity position, which is key to its ability to generate
profit.
External support
We regard L-Bank as a government-related entity (GRE). In accordance with our criteria for GREs, our view of an
"almost certain" likelihood of government support for L-Bank is based on our assessment of the bank's:
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 2
1381136 | 301748190Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank)
• "Critical" role for the government of Baden-Wuerttemberg as the state's only development bank with a mandate to
support regional economic and social objectives; and
• "Integral" link with the state government. L-Bank essentially acts as an arm of the state and benefits from an explicit
guarantee of all its liabilities from Baden-Wuerttemberg, a maintenance obligation ("Anstaltslast"), and a statutory
guarantee of its liabilities ("Gewaehrtraegerhaftung").
We expect L-Bank to continue to play a prominent public policy role as the state's development bank. Accordingly, we
do not expect the bank's ownership status or the guarantee mechanism to change over the medium term.
Our 'AAA' issue ratings on L-Bank's nondeferrable senior subordinated debt are the same as the ratings on the bank's
senior unsecured debt. This reflects our assessment that the likelihood of state support in the event of stress is "almost
certain" for both subordinated liabilities and senior unsecured debt.
Outlook
The stable outlook reflects the outlook on the long-term rating on the State of Baden-Wuerttemberg.
All other things being equal, any rating action on Baden-Wuerttemberg would be reflected in a similar rating action on
L-Bank. We believe that the state's guarantees and L-Bank's current GRE status will be maintained over the medium
term, since the bank is likely to remain an integral part of the state's economic development activities. This assessment
is consistent with an agreement between Germany and the European Commission in March 2002 on state support for
German development banks.
A material weakening of L-Bank's role for, or link to, the state, including changes to the guarantee or ownership
structure, could have negative rating implications for the bank. We currently consider such a scenario unlikely.
Related Criteria and Research
• Baden-Wuerttemberg (State of), March 25, 2014
• Banks: Rating Methodology And Assumptions, Nov. 9, 2011
• Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
Table 1
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Key Figures
--Year-ended Dec. 31--
(Mil. €) 2013 2012 2011 2010 2009
Adjusted assets 70,672.9 70,621.6 67,982.0 60,993.3 59,709.1
Customer loans 23,773.5 24,288.4 22,786.4 22,544.6 22,427.1
Adjusted common equity 3,007.7 2,858.0 2,662.8 2,023.8 2,010.9
Operating revenues 357.4 373.1 803.9 339.7 436.1
Noninterest expenses 173.4 152.7 143.6 130.5 140.9
Core earnings 102.1 166.7 659.4 166.8 230.6
N.A.--Not available. N/A--Not applicable. N.M.--Not meaningful.
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 3
1381136 | 301748190Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank)
Table 2
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Business Position
--Year-ended Dec. 31--
(%) 2013 2012 2011 2010 2009
Total revenues from business line (currency in 357.4 373.1 803.9 339.7 436.1
millions)
Return on equity 3.4 5.3 26.5 7.0 2.5
N.A.--Not available. N/A--Not applicable. N.M.--Not meaningful.
Table 3
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Capital And Earnings
--Year-ended Dec. 31--
(%) 2013 2012 2011 2010 2009
Tier 1 capital ratio 15.7 14.2 9.7 8.6 8.1
S&P RAC ratio before diversification 16.4 17.9 11.5 8.2 8.2
S&P RAC ratio after diversification 15.9 14.1 11.3 7.8 7.8
Net interest income/operating revenues 81.2 79.2 40.4 93.8 88.8
Fee income/operating revenues 11.5 10.5 5.3 11.9 7.3
Noninterest expenses/operating revenues 48.5 40.9 17.9 38.4 32.3
Preprovision operating income/average assets 0.3 0.3 1.0 0.3 0.5
Core earnings/average managed assets 0.1 0.2 1.0 0.3 0.4
N.A.--Not available. N/A--Not applicable. N.M.--Not meaningful.
Table 4
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Risk Position
--Year-ended Dec. 31--
(%) 2013 2012 2011 2010 2009
Growth in customer loans (2.1) 6.6 1.1 0.5 (1.7)
Total diversification adjustment / S&P RWA before 3.0 27.5 1.8 5.3 5.8
diversification
Total managed assets/adjusted common equity (x) 23.5 24.7 25.5 30.1 29.7
New loan loss provisions/average customer loans 0.3 0.2 N.M. 0.2 0.3
N.A.--Not available. N/A--Not applicable. N.M.--Not meaningful.
Table 5
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Funding And Liquidity
--Year-ended Dec. 31--
(%) 2013 2012 2011 2010 2009
Core deposits/funding base 11.8 12.7 13.0 13.3 12.3
Customer loans (net)/customer deposits 301.2 282.8 264.1 282.5 314.2
Long term funding ratio 64.9 71.1 71.6 72.6 70.4
Stable funding ratio 93.1 102.9 103.4 97.3 93.1
Short-term wholesale funding/funding base 36.7 30.1 29.5 28.4 30.7
Broad liquid assets/short-term wholesale funding 1.0 1.2 1.1 1.0 1.0
(x)
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 4
1381136 | 301748190Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank)
Table 5
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank) Funding And Liquidity (cont.)
Net broad liquid assets/short-term customer (36.6) 163.2 139.5 34.6 (45.3)
deposits
Short-term wholesale funding/total wholesale 41.6 34.5 34.0 32.8 35.0
funding
Narrow liquid assets/3-month wholesale funding 1.4 1.8 1.5 1.5 1.6
(x)
N.A.--Not available. N/A--Not applicable. N.M.--Not meaningful.
Ratings Detail (As Of January 28, 2015)
Landeskreditbank Baden-Wuerttemberg - Foerderbank (L-Bank)
Counterparty Credit Rating AAA/Stable/A-1+
Counterparty Credit Ratings History
07-Mar-2012 AAA/Stable/A-1+
16-Dec-2010 AA+/Positive/A-1+
20-Sep-2010 AA+/Watch Pos/A-1+
Sovereign Rating
Germany (Federal Republic of) (Unsolicited Ratings) AAA/Stable/A-1+
Related Entities
Baden-Wuerttemberg (State of)
Issuer Credit Rating AAA/Stable/A-1+
Commercial Paper
Local Currency A-1+
Senior Unsecured
Greater China Regional Scale cnAAA
Senior Unsecured AAA
Short-Term Debt A-1+
Subordinated AAA
*Unless otherwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable
across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country.
Additional Contact:
Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 5
1381136 | 301748190Copyright © 2015 Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. All rights reserved.
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part
thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval
system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be
used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or
agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not
responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for
the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL
EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING
WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no
event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential
damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by
negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and
not statements of fact. S&P's opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase,
hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to
update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment
and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does
not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be
reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain
regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P
Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any
damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective
activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established
policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P
reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites,
www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription) and www.spcapitaliq.com
(subscription) and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information
about our ratings fees is available at www.standardandpoors.com/usratingsfees.
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JANUARY 28, 2015 6
1381136 | 301748190You can also read
