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DBRS Morningstar confirms NordLB's ratings following €2.8B capital injection

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DBRS Morningstar confirms NordLB's ratings following €2.8B capital injection

DBRS Morningstar confirmed the ratings of Norddeutsche Landesbank Girozentrale, following the German lender's €2.8 billion cash injection from its public-sector owners and savings banks as part of a recapitalization package.

The agency confirmed NordLB's A/R-1 (low) long- and short-term issuer and deposit ratings, A (low) senior non-preferred debt rating, R-1 (low) short-term debt rating and A long-term senior debt rating. The bank's support assessment remains unchanged at SA1, while its intrinsic assessment was maintained at BBB (low).

The trend on all the ratings has been returned to positive, in line with the ratings of the broader Sparkassen-Finanzgruppe.

The rating actions conclude a review on NordLB's ratings initiated in January 2019.

DBRS Morningstar said the recapitalization, which is projected to boost NordLB's common equity Tier 1 ratio above 14% by 2019-end, makes the bank well prepared for future regulatory changes. However, the agency said NordLB, which has limited flexibility to tap capital markets, will need strong capital ratios as it expects the bank to be challenged in the future to generate additional capital internally.