New Divisional Management Takes the Lead, Affirms Sparkassen President Cord Bockhop
Hannover
Nord/LB institutions predict no dividend distribution for the year 2024.
Front-Page Interview
Post a substantial period of reorganization, Nord-LB is anticipated to record a substantial hike in profits by 2024 compared to the preceding year, yet shareholders do not foresee a dividend. "Nope, that's not on the table," states Cord Bockhop, who assumed the position of Sparkassenverband Niedersachsen's president in mid-2024 and is also a member of Nord/LB's supervisory board, in an interview with the Financial News. The bank, which reported a post-tax profit of €195 million in the first half of 2024, a 79% increase from the same period last year, will unveil its annual results on March 25.
The bank's payout schedule remains uncertain. Bockhop is unwilling to set a specific timeline. "The bank's top priority is the implementation of a new bank management system." This is a multi-phase IT project initially rolled out in September 2023, with the goal of meeting new regulatory requirements. It involves substantial investments in the mid-three-digit million euro range. Sparkassen President Bockhop estimates the project to take several years to complete.
Braunschweigische Landessparkasse Separation on Hold
The implementation of the new bank management system takes precedence over the question of whether and when the Braunschweigische Landessparkasse (BLSK) should be detached from the Landesbank, as per Bockhop. Nord/LB's stakeholders, including the Land Niedersachsen with a stake of around 58%, received an analysis from economic consultants Deloitte before the Christmas season. According to the study, separating the partially divisional-enabled Sparkasse is theoretically feasible, but a multi-year preparation period is also necessary.
Communities in the Braunschweig region have expressed interest in the BLSK. Nevertheless, a separation is dependent on Nord/LB not incurring any financial losses. Bockhop highlighted in the interview that the Lower Saxony Sparkassen, as BLSK owners, are not an option. "We are a regional association of currently 38 independent and municipal Sparkassen, not a shareholder of a Sparkasse. That's where we draw the line."
Increased Risk Provision at Sparkassen
According to Bockhop, the Lower Saxony association institutions will also shoulder a higher risk provision in 2024. "The Sparkassen cannot escape the economic downturn." The operating result before valuation is predicted to slightly fall short of the previous year's level at €1.7 billion. From an economic standpoint, no Sparkasse in Lower Saxony is in dire straits, claims the association president.
[1] While no specific information about a new "Bank Steering" system is available, NORD/LB recently announced a significant partnership with the European Investment Bank (EIB) to propel various strategic initiatives, though details regarding a "Bank Steering" system are absent in this partnership. For accurate information on a "Bank Steering" system, it would be advisable to reach out to NORD/LB directly or search for press releases from the bank.
- Cord Bockhop, in an interview with the Financial News, affirmed that despite the anticipated profits hike by Nord-LB in 2024, a dividend is not to be expected.
- Bockhop, the Sparkassenverband Niedersachsen's president, stated that the bank's implementation of a new bank management system, which began in September 2023, is the bank's top priority, requiring substantial investments and several years to complete.
- In regards to the separation of the Braunschweigische Landessparkasse from the Landesbank, Bockhop mentioned that this process is on hold due to the focus on the new bank management system.
- Bockhop highlighted that the Lower Saxony Sparkassen, as the BLSK owners, are not potential shareholders of a Sparkasse and are not an option for such a separation.
- Bockhop also stated that the Lower Saxony association institutions will shoulder a higher risk provision in 2024 due to the economic downturn, with the operating result before valuation predicted to slightly fall short of the previous year's level.
