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EC may give more clarity on NordLB rescue by October-end

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EC may give more clarity on NordLB rescue by October-end

The European Commission may give more clarity about its stance on the rescue of Norddeutsche Landesbank Girozentrale, or NordLB, by the end of October, according to a report by German press agency dpa, citing outgoing Budget Commissioner Günther Oettinger and carried by Sueddeutsche Zeitung on Aug. 27.

The EC "does everything" to enable the continuation of NordLB's operations with a restructuring concept and a reduction of corresponding business areas, which is in the interest of the economy in northern Germany, Oettinger reportedly said. The commissioner also said the authority is working on a speedy resolution, according to the report.

He expects clarity as early as the end of October when he leaves office.

NordLB, majority-owned by the state of Lower Saxony, is in urgent need of fresh capital following a spree of deleveraging toxic shipping loans over the past 18 months. The bank has to raise its common equity Tier 1 ratio to 14% by the end of 2019 from 6.75% as of March 31, which was well below the regulatory minimum requirement of 10.6%.

This would be impossible to achieve without the €3.6 billion rescue package to be provided by its state owners and the public savings banks sector. The package requires the approval of the European Commission, which has to make sure the transaction is in line with EU state aid rules.

The capital injection, originally scheduled to be executed by the end of August, has been delayed to the fourth quarter.