• Board of Management agreements of Dr. Johannes Evers and Hans Jürgen Kulartz extended - Supervisory Board Chairman Georg Fahrenschon: "Continuity in personnel ensures necessary change"
  • Committees support transformation plan and approve transaction with DekaBank
  • CEO Dr. Johannes Evers: "Transformation into savings bank for the capital city proceeding rapidly and to schedule - further growth in customer business."
  • Consolidated earnings before taxes rise to € 122 million after nine months

The Supervisory Boards of Landesbank Berlin Holding AG and Landesbank Berlin AG made crucial decisions for the future of the Bank in their meeting today. The contracts with the CEO Dr. Johannes Evers and the Director of Regional Corporate Banking Hans Jürgen Kulartz were extended by a further five years. Evers has been on the Boards of Management of LBB and Berliner Sparkasse since 2000, initially as an ordinary member, and as the Chairman since 2009. Kulartz has also been a Board of Management member of LBB and Berliner Sparkasse since 2000.

The Chairman of the Supervisory Board sees the extension of these agreements as an "important sign of the continuity in personnel that will ensure the necessary change". In the last few years under the leadership of its Board of Management and its Chairman, LBB has successfully managed the financial crisis and the global debt crisis in addition to further challenges, with only a brief disruption in its consistently positive results. In addition, LBB reduced its risks under its own power and always met capital requirements while doing so. At the same time, it has increased its market share and steadily attracted new customers. Fahrenschon continued: "The ongoing transformation of the Landesbank into a savings bank for the capital is a further feat in which management continuity is highly important. I look forward to continuing our constructive and trusting cooperation with this Board of Management, even in the face of future challenges."

The committees support the transformation of LBB into Berliner Sparkasse. They also approved the sale of customer-oriented Capital Markets business and LBB-INVEST to DekaBank. The Boards of Management of LBB and DekaBank had previously agreed the key points for the sale on 16 July 2013. DekaBank will acquire LBB-INVEST with fund assets under management of around € 10 billion and continue to manage it as an independent company at the established Berlin location until at least the end of 2016. Furthermore, the trading and sales employees for customer-oriented Capital Markets business are to switch from LBB to DekaBank. It was agreed not to disclose the amount of the purchase price. Both transactions are set to be completed by the end of 2013/start of 2014.

Thus, this has assured a key prerequisite for the dismantlement of landesbank structures. The overall concept for the Group's transformation still intends the business and organisational hiving off of Berlin Hyp and its positioning as a national financing provider for commercial property in Sparkassen-Finanzgruppe.

Berliner Sparkasse will systematically establish itself as a savings bank for the German capital and further expand its leading market position in regional retail and corporate client business. The brand will change from "LBB" to "Berliner Sparkasse" as at 1 January 2014. From that date, all of the Bank's business, with the exception of national card business, will be operated under the "Berliner Sparkasse" brand.

Dr. Johannes Evers said: "We will begin 2014 as Berliner Sparkasse. It will be a savings bank with a strong presence and of considerable importance to Berlin, its customers and the savings bank family. Our medium-term goal is clear - in 2018, the 200th birthday of the savings bank, there will be a successful, well positioned Berliner Sparkasse, firmly established for its customers and an indispensable part of the city, its economy and its society."

Successful operative performance after nine months

The business performance of the first nine months gives reason to expect good operating earnings despite the low interest environment. The Bank is continuing its successful performance in customer business. Consolidated earnings before taxes (after restructuring and the bank levy) amounted to € 122 million in the first nine months, up € 7 million on the previous year's figure of € 115 million.

Evers commented: "This is a respectable result, not least in light of the comprehensive transformation work and the ongoing reduction of holdings no longer consistent with strategy. Once again we have seen that we are successful everywhere that we ourselves can influence our business." However, the lingering low interest phase and the smouldering debt crisis in Europe still make the general environment for banks difficult, Evers continued.

Development of customer business

Berliner Sparkasse continued to expand its position on the Berlin market both in Retail Banking and Regional Corporate Banking. Since the start of the year, a net total of 19,900 new private current accounts have been opened, while the number of commercial and corporate clients climbed by almost 1,600 to over 72,000 in the same period.

With net growth of more than 121,000 credit cards since the start of the year, LBB has also further expanded its leading position as the largest provider of fee-based credit cards in Germany.

Net interest income and new lending business were still down in the previous year in commercial Real Estate Financing as a result of the measures implemented in the 2012 financial year to reduce risk-weighted assets (RWA), while risk provisioning developed positively in the reporting period.

Business with the savings banks was expanded once again: S-Servicepartner now manages more than 250 savings banks, 242 savings banks are currently benefiting from services offered by S-Kreditpartner, 106 of which use the full S-Privatkredit and S-Autokredit service package.

Selected consolidated IFRS figures as at 30 September 2013:

At € 513 million, net interest income was down significantly on the figure for the first nine months of 2012 (previous year: € 664 million). Among other things, the decline is due to the flat yield curve and the continued reduction of risk assets, particularly in investment securities. Furthermore, there were also effects relating to the time value of money in net income from financial instruments recognised at fair value through profit or loss.

Overall, a net expense of € 42 million was reported for allowances for losses on loans and advances (previous year: € 56 million). New additions of € 140 million were offset by reversals of € 98 million.

Net fee and commission income developed well and reached € 226 million (previous year: € 196 million). The improvement was generated in all types of commission, but especially credit and card business.

Net income from financial instruments recognised at fair value through profit or loss was up significantly on the previous year at € 191 million after the first nine months (previous year: € 156 million). This increase essentially corresponds to the opposing effects in net interest income.

Net income from investment securities reported a total loss of € 26 million (previous year: € -32 million). In addition to necessary remeasurement adjustments, the reduction of investment securities also led to losses on disposals.

Administrative expenses amounted to € 743 million (previous year: € 733 million). These relate to staff costs, depreciation and amortisation and other administrative expenses, which also include € 14 million in additional costs for the Bank's transformation.

The cost of the bank levy of € 22 million includes the contribution to the restructuring fund due on 30 September of each year.

The income tax expense of € 41 million (previous year: € 25 million) includes the costs of current and deferred taxes.

Consolidated net profit/earnings after taxes amounted to € 81 million (previous year: € 90 million).

Key accounting figures as at 30 September 2013

As against 31 December 2012, the Group's total assets decreased by € 5.8 billion to € 112.5 billion.

The RVG Group's overall capital ratio for liable capital relevant to regulatory requirements was 15.99% as at 30 September 2013 (31 December 2012: 15.46%), its tier 1 capital ratio was 13.95% (31 December 2012: 13.20%).

Outlook for 2013 as a whole

The remaining months of the 2013 financial year will still be dominated by the considerable lingering uncertainty on the financial markets and the unresolved debt crisis in Europe. The environment for banks will also remain difficult on account of the ongoing low interest phase. In addition, there are the more stringent tier 1 capital requirements, for which the Bank has already been greatly reducing its risk positions since 2012. Nonetheless, LBB is assuming that it can continue the positive development in its customer business.

In the fourth quarter, substantial provisions for LBB's transformation into a savings bank will be recognised in its accounts and - as previously advised - substantially reduce its earnings. For 2013 as a whole the Group is therefore still forecasting a good operating result for the year, albeit a negative one after deducting the provisions of € 275 million for its transformation.

Supervisory Boards make key decisions for future



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