Helaba does not pass EBA Stress Test for formal Reasons

No Recapitalisation Requirement under economic Aspects

Helaba Landesbank Hessen-Thüringen has not passed the stress test run by the European Banking Authority for formal, technical reasons. This is due to the fact that the EBA does not apply a tangible, but merely a formal standard as at the reporting date 30 September 2011. As a result, Helaba may not report the capital contributions of the State of Hesse in the volume of EUR 1.92 billion as Core Tier 1-capital as at the reporting date 30 September, despite all steps that have already been taken in the meantime.

Under formal, technical aspects, this means that the Bank –considering the requirement of 9 per cent Core Tier 1-capital – has to report an "undercapitalisation" of EUR 1.497 billion. This technical capital shortfall is exclusively due to the fact that the EBA has not recognised the silent participations held by the State of Hesse in an amount of EUR 1.92 billion as at the reporting date 30 September 2011. This will however be the case as at 30 December 2011. Helaba complied with the instructions by the supervisory authority and has reported this core capital under the heading "Hybrid instruments not subscribed by government" in the Template provided by the EBA. When this core capital is included, Helaba has a Core Tier 1-capital ratio of 9.8 per cent as at 30 September 2011. There is thus no tangible recapitalisation requirement; not a single euro of additional equity capital needs to be contributed.

Landesbank Hessen-Thüringen and the State of Hesse have taken all necessary steps to convert the silent participations held by the State of Hesse into capital contributions which comply with the demands on Core Equity Tier I (CET 1)-capital. The corresponding contractual arrangements have been initialled on 31 October 2011 by the parties to the agreements and submitted to the BaFin and to Deutsche Bundesbank.

The Supervisory Board and the Board of Owners of Landesbank Hessen-Thüringen have given their consent to the agreements on the adaptation of the silent participations to CET 1-capital on 24 November 2011. At their meeting on 29 November 2011, EU Competition Commissioner Almunia informed the Hessian Minister of Finance, Dr. Schäfer, that the EU Commission sees no violation of competition laws as regards the contractually agreed measures ("no state aid") and that these measures fulfil all prerequisites for the Private Market Investor Test.

After the necessary consents by the corporate bodies of the Bank and after compliance with regulatory requirements and EU legal provisions on the granting of subsidies, the adaptation of the silent participations will become legally valid as at 30 December 2011. For Helaba, this means that there is no tangible, but solely a technical recapitalisation requirement as at the reporting date 30 September 2011, which will be covered automatically upon the entry into force of the agreements on the adaptation of the silent participations.

Press | Dec 7, 2011

Press Release of Ministry of Finance of the state of Hesse

Minister of Finance Dr. Thomas Schäfer expresses his surprise at the approach taken by the EBA

"Taking a formalistic approach unnecessarily increases the risk of further turmoil in the markets - Helaba is healthy to the core and able to cope with the crisis"

» Press Release of Ministry of Finance of the state of Hesse (PDF, 39 KB)