In conversation: Michael Kiesewetter
Lower Saxony housing development fund is being discussed as a contribution in kind – the share of lending business in the funding volume is increasing
The NBank is to become a full-fledged development bank in Lower Saxony and will operate significantly more lending than grant business in the future. The prerequisite is an increase in equity capital. A decision should be made before the summer break. Ideas about how the bank can be strengthened are now well advanced.
By Carsten Steevens, Hamburg
In order to strengthen its equity capital, the NBank is moving towards a contribution in kind from the state of Lower Saxony. The transfer of the Lower Saxony housing and residential district development fund to the development bank is under discussion, which, according to the red-green state government’s plans, is intended to expand its loan business in the coming years in view of the expected high need for public investment and fewer financial opportunities for state subsidies.
Decision pending
A political decision is still pending. At the ceremony marking the 20th anniversary of the NBank in March, Lower Saxony’s Prime Minister Stephan Weil (SPD) expressed the hope that he would “shortly” get down to business in upgrading the development institution. There is a decision in the room before the summer break.
The housing support fund, which NBank manages in trust, is a special fund that is used to finance social housing support in the state of Lower Saxony. He does not want to anticipate the state government’s formal decision, but the likelihood that the housing development fund will be contributed to the bank as a non-cash contribution is “increasingly increasing,” said CEO Michael Kiesewetter on Wednesday when presenting figures for the 2023 financial year in an interview with the stock exchange -Newspaper.
Just a question of how
According to participants, State Secretary for Economic Affairs and NBank Board of Directors Frank Doods had previously said in a press conference that strengthening the funding institution’s equity capital was “not a question of if, but of how.”
He emphasized that a possible contribution of the economic development fund to the NBank would not be accompanied by any reductions in housing support in Lower Saxony. As a result of increased demand for loans for living space, the development bank’s new commitments to housing funding increased by 100 million euros in 2023 to the new high of 454 million euros.
NBank expects “a good year” for the “technical contribution” of the contribution in kind. Doods and Kiesewetter left the extent of the planned equity strengthening open. According to the NBank boss, it is a “significant” number. The bank, which with total assets of 5.5 billion euros is the smallest state development institution in Germany based on the economic output of its federal state, could make significant gains by expanding its lending business. Gradually and organically, says Kiesewetter. Lower Saxony deserves a development bank with total assets in the double-digit billion euro range.
The CEO did not want to comment specifically on the future relationship between the loan business and the bank’s grant business. The relationship could completely change: a ratio of two thirds loan and one third grant business is “a rather conservative estimate”. Last year, the volume of approved loans rose to around 771 (previous year: 597) million euros, making up 55% of the funding granted. Although these fell slightly from 1.55 billion euros in 2022 (with corona aid: 3.5 billion euros) to 1.42 billion euros, they were higher than before the corona crisis.
Capital market in view
It is unlikely to decrease in 2024, added Kiesewetter, pointing to continued high demand for social housing support and municipal infrastructure loans. In the long term, NBank will make greater use of the capital market for refinancing, including through bearer bonds.
2024-04-10 17:19:11
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