LB Kiel – Bank for the North

Transcription

LB Kiel
Landesbank
Schleswig-Holstein
Girozentrale
LB Kiel – Bank for the Nor th
Annua l Re por t
2001
3
Contents
LB Kiel
Annual Report 2001
6
10
LB Kiel at a Glance
Preface of the Managing Board
12
13
15
16
17
18
19
26
32
32
Report of the Guarantors’ Meeting
Report of the Supervisory Board
Management and Group Management Report
- The Economic Environment
- The Banking Environment and EU-Proceedings
- LB Kiel’s Strategic Approach
- Business Development
- Risk Report
- Personnel
- Outlook
34
LB Kiel Geschäftsbank
37
39
49
59
62
63
Strategic Missions
- Bank for the North
- International Product and Sector Specialist
- Partner in the International Capital Markets
- Landesbank Schleswig-Holstein International S. A. (LI)
- Hamburgische Landesbank (HLB)
65
104
105
107
108
Annual Accounts and Group Annual Accounts
for 2001
- Group Balance Sheet
- Group Statement of Income
- Balance Sheet of LB Kiel
- Statement of Income of LB Kiel
- Notes to the Annual Accounts and
Group Annual Accounts (incl. Segment Report
and Group Cash Flow Statement)
- Guarantors’ Meeting
- Supervisory Board
- Managing Board
- Independent Auditor’s Report
109
Departments of the Managing Board
110
Glossary of Balance Sheet Items
114
Our Commitment to Society
and the Region
116
Addresses
66
70
72
76
79
6
LB Kiel at a Glance
LB Kiel at a Glance
Landesbank Schleswig-Holstein Girozentrale,
LB Kiel for short, is
a universal bank with regional roots
and an international focus,
which offers a broad range of traditional and innovative
financial products and is positioned as the Bank for the
North focusing on the core markets of northern
Germany and the Baltic Sea region
the central clearing institution for the savings banks
of Schleswig-Holstein,
which it provides with a wide spectrum of supplementary group services (e. g. refinancing funds, advisory
services regarding balance sheet structure, capital
market products) and with which it co-operates in the
building society business via Landes-Bausparkasse (LBS)
a state and local-government bank,
granting loans to public bodies and to the State of
Schleswig-Holstein, issuing and placing bonds and
supporting the federal state in its economic and structural tasks via Investitionsbank Schleswig-Holstein –
the central promotion institute of Schleswig-Holstein.
Locations
- Headquarters: Kiel
- Branches: Lübeck, Luxembourg, Copenhagen, Helsinki
- Representative Offices: Hamburg, Berlin, Stockholm,
Oslo, Tallinn, London
Ratings
- Moody’s: short-term P-1, long-term Aa1
- Standard & Poor’s: short-term A-1+
- Fitch: short-term F1+, long-term AAA
Major Equity Holdings
- Hamburgische Landesbank (49.5 %)
- Landesbank Schleswig-Holstein International S. A.,
Luxembourg (100 %)
- Gudme Raaschou Bankaktieselskab, Copenhagen
(100 %)
- PCA Corporate Finance Oy, Helsinki (71 %)
Legal Form /Executive Bodies
-
Institution under public law
Guarantors’ Meeting
Supervisory Board
Managing Board
Owners
- the State of Schleswig-Holstein 25.05 %
- the Savings Banks and Giro Association of SchleswigHolstein 25.05 %
- Westdeutsche Landesbank Girozentrale ( WestLB )
39.9 %
- Landesbank Baden -Württemberg 10 %
Foundation
Established in 1917 as the state bank of the province of
Schleswig-Holstein
Governmental Control
- Federal Banking Supervisory Office (as of May 1, 2002:
Federal Financial Supervisory Agency)
- Deutsche Bundesbank
- Ministry of Economic Affairs, Technology and Transport of the State of Schleswig-Holstein
Member of
- German Savings Banks and Giro Association
- Federal Association of German Public Banks
LB Kiel at a Glance
Financial Highlights of the LB Kiel Group * )
31/12/2001
31/12/2000
Business volume
Total assets
Liable capital
€ 159.5 bn
€ 141.0 bn
€ 7.0 bn
€ 142.1 bn
€ 128.1 bn
€ 6.3 bn
€ 17.4 bn
€ 12.9 bn
€ 0.7 bn
12.2
10.1
11.1
Operating profit before risk provisions
Operating profit after risk provisions
Net income for the year
€ 671.9 m
€ 362.6 m
€ 174.0 m
€ 479.8 m
€ 308.9 m
€ 84.3 m
€ 192.1 m
€ 53.7 m
€ 89.7 m
40.0
17.4
106.4
2,457
2,361
96
4.1
9.8 %
42.5 %
9.4 %
5.5 %
10.4 %
47.0 %
10.2 %
5.9 %
Employees 1)
RO E
Cost - income ratio
Solvency ratio
Core capital ratio
1)
Changes
in absolute
terms
in %
excluding Hamburgische Landesbank (HLB) and Schleswig-Holstein casinos
Total assets (Group)
in € billion
Liable capital
(Group)
Operating profit after
risk provisions (Group)
in € billion
in € million
150
350
7
120
90
60
6
300
5
250
4
200
3
150
2
100
1
50
30
1997
*)
0
0
0
1998
1999
2000
2001
1997
1998
1999
2000
2001
1997
1998
1999
2000
2001
LB Kiel’s Group accounts include the Bank – including Investitionsbank Schleswig-Holstein and Landes-Bausparkasse – as well as Landesbank Schleswig-Holstein International S. A.,
Luxembourg (LI), LB Schleswig-Holstein Finance B.V., Amsterdam, Gudme Raaschou Bankaktieselskab, Copenhagen, the 49.5 % investment in Hamburgische Landesbank and, for the
first time, the Schleswig-Holstein casinos.
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10
Dear Clients and Business Partners,
On July 17, 2001, the Federal Government of Germany and the European Commission reached an agreement about the state guarantees for German financial
institutions under public law. This set a new course for Germany’s public-law banks and
hence LB Kiel. According to this agreement, Anstaltslast (Maintenance Obligation) will
be modified and Gewährträgerhaftung (Guarantee Obligation) abolished after a transitional period ending on July 18, 2005. Liabilities entered into before the agreement
was reached will remain covered by Gewährträgerhaftung for an unlimited period,
while liabilities entered into during the transitional period will be covered if their term
does not extend beyond 2015.
We now have to ensure that the Bank will be able to maintain its good standing in the
capital markets beyond 2005. The Bank’s profitability plays a key role in this context.
A good foundation for long-term profitability has been laid in the past years. Following the agreement with the EU, we decided in October 2001 to launch a new
programme for the future called “Concentration of resources”. This means that we
will focus on our core competencies. We will push ahead and accelerate the implementation of our three pillar strategy as the “Bank for the North”, a product and
sector specialist operating on an international scale and an established player in the
international capital markets. Our 2001 figures show that we are on the right course.
In a difficult economic environment, we clearly increased our operating profit after
risk provisions and evaluations and expanded our equity capital base.
We are determined to proactively manage the imminent process of change. An
important step will be the planned merger with Hamburgische Landesbank. This has
been our strategic objective ever since we decided to acquire an interest in Hamburg’s
well-positioned Landesbank back in 1997. In March of this year, the shareholders of LB
Kiel and Hamburgische Landesbank instructed the Managing Boards of the two banks
to develop a concept for the merger. The merger has to be approved by the shareholders of the two banks and the State Parliaments of the two federal states.
Against the background of the imminent challenges, we are aware that our highly
committed and qualified employees are the basis for our competitiveness. We would
like to take this opportunity to thank them as well as the members of the staff council
for their commitment and ask them to proactively support the imminent changes with
a view to the opportunities.
We would like to thank Peter Pahlke for his 25 years of successful work as a
member of the Board. He went into retirement with effect from July 31, 2001.
We also thank our shareholders for working constructively with us in our restructuring process.
Our special thanks go to our clients and business partners for the confidence
placed in us. We will continue to support you as an efficient partner.
Yours sincerely
Dr. Dietrich Rümker
Hans Berger
Dieter Pfisterer
Dr. Erwin Sell
Franz S. Waas, Ph. D.
Managing Board (from left to right):
Dieter Pfisterer
Hans Berger
Dr. Erwin Sell
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Report of the Guarantors’ Meeting
Report of the
The Board of Guarantors convened four ordinary meetings in the year under
review.
On May 29, 2002, it approved the 2001 annual accounts and statement of
financial condition drawn up by the Managing Board, which are herewith
adopted. During the same meeting the Guarantors’ Meeting approved of the
acts of the Managing Board of the Bank for the 2001 business year and decided
on the appropriation of the profit as proposed by the Managing Board and the
Supervisory Board.
Kiel, May 29, 2002
The Guarantors’ Meeting of
Landesbank Schleswig-Holstein Girozentrale
Heide Simonis
Chairwoman
The Supervisory Board and its committees were regularly informed about the
business development and the situation of the Bank and the Group during the
report year. They supervised the Managing Board’s conduct of business in accordance with the legal and statutory regulations and decided on matters requiring
their approval which were submitted to them.
Wollert-Elmendorff Deutsche Industrie Treuhand GmbH (WEDIT) Wirtschaftsprüfungsgesellschaft audited the annual accounts of the Bank and of the
Group as well as the statement of financial condition for the 2001 business
year. The annual accounts comply with the legal requirements. The statement of
financial condition is consistent with the annual accounts. The certificate of
audit was given without qualifications.
The Supervisory Board and the Audit Committee composed of its members
have comprehensively reviewed the official auditor’s report and conclusions and
have no objections.
The Supervisory Board and the Audit Committee have also reviewed the
annual accounts and statement of financial condition drawn up by the Managing
Board. No objections have been raised. The Guarantors’ Meeting was recommended to approve the annual accounts and statement of financial condition
drawn up by the Managing Board.
The Supervisory Board approved the proposal of the Managing Board on the
distribution of profit to the shareholders.
The Supervisory Board has taken cognizance of the Group annual accounts.
The Supervisory Board herewith expresses its thanks to the Managing Board
and the employees of the Bank for their efforts in the 2001 business year.
The Supervisory Board mourns the death of its Chairman of many years,
Dr. Gerhard Stoltenberg, former Minister President of the State of SchleswigHolstein, who deceased on November 23, 2001. Dr. Stoltenberg was a member
of the Supervisory Board of LB Kiel from 1971 to 1982. With his economic
expertise and professional competence, he was instrumental in shaping the
development of the Bank. The fortunes of the Bank remained a continuing
interest even after leaving his position as the Minister President of the State of
Schleswig-Holstein. We will treasure his memory.
Kiel, May 29, 2002
The Supervisory Board of Landesbank Schleswig-Holstein Girozentrale
Heide Simonis
Chairwoman
13
Management Report
Management Report
and Group Management Report
16
The Economic Environment
17
The Banking Environment and EU Proceedings
18
LB Kiel’s Strategic Approach
19
Business Development
26
Risk Report
32
Personnel
32
Outlook
15
16
Management Report
The Economic Environment
The development of the international financial markets
reflected the stronger than expected slowdown of the
world economy in 2001.
2001: Global Slowdown in Growth …
The fiscal year 2001 was marked by a much stronger
than expected slowdown of the economy both on a
national and international scale. The preceding key
interest rate rises by the central banks, the increase in
oil prices and the bursting of the bubble in the information and telecommunications industry resulted in a
considerably slowdown of the US economy, which had
previously been the locomotive for global growth; USgrowth fell from 4.1 % in 2000 to 1.2 % in the year
under review. The eurozone could not take over the
role of a growth driver for the world economy. The
European growth rate declined from 3.4 % in 2000 to
1.5 % in 2001, with growth in Germany even down from
3 % to 0.6 %. In autumn 2001, the recovering economy
was hit by the tragic events on September 11 and by
the resulting uncertainties among consumers and
investors. The slowdown of the big economies also
affected the emerging markets. Especially Asia and Latin
America recorded declining growth rates. The crises in
Argentina and Turkey had, however, only a limited
impact on the rest of the world and the dreaded spillover remained very moderate.
… Hit the Financial Markets
In parallel to the economic slowdown and the resulting
poorer company figures, the weakness in the stock
markets continued in the year under review. The confidence crisis following the events on September 11,
even caused a temporary sell-off which, however,
formed the basis for the subsequent recovery. Yields on
the bond market continued to fall with strong fluctuations. Towards the end of the year, the collapse of the
US energy trading corporation, ENRON, and the resulting general mistrust of corporate financial reporting
overshadowed the markets.
Major Key Interest Rate Cuts by the Central Banks
In response to the economic slowdown, the central
banks completely changed course. In 2001, the Fed cut
its key interest rate in eleven steps to 1.75 % at the end
of the year – the lowest level in four decades. The ECB
lowered its main refinancing rate in four steps from
4.75 % to 3.25 %. The eurozone benefitted primarily
from its declining rate of inflation which fell from its
high in May 2001 to 2.1 % at the end of the year.
Recovery Expected in 2002
In the course of the first quarter of the current year,
the indicators signalled an economic recovery in the
USA and the eurozone. Consequently, the stock exchanges recovered from their lows following the shock
in September and capital market yields also increased
noticeably again.
Management Report
The Banking Environment
and EU Proceedings
The agreement reached in the state aid dispute with
the EU Commission impacts the banking environment
for banks under public law.
Difficult Income Situation
In a more unfavourable economic environment, the
income situation of the banking sector deteriorated
considerably in the year under review. As a result, the
pressure to realize cost savings and strengthen distribution power through concentration and cooperation
continued to increase. On the other hand, even the
pooling of specific areas of operation of several banks
(such as handling of payments and securities settlement) proved to be difficult. After the unsuccessful
merger attempts between major private banks, the onestop finance concept (“bancassurance”) gained momentum in the year under review with the acquisition of
Dresdner Bank by Allianz as well as the intensification
of the co-operation between Munich Re and HypoVereinsbank.
Basle II Postponed
The introduction of the new Basle Capital Accord
(Basle II) originally planned for 2004 was postponed to
2005. At the same time, it was decided to hold an
additional third consultation round in 2002. Meanwhile,
there are signs for a further postponement of the
introduction to 2006. LB Kiel nevertheless continues to
prepare for Basle II. In the year under review, we have
launched a comprehensive project to prepare for the
implementation of the emerging resolutions. LB Kiel
will use an internal ratings based (IRB) approach with
the aim to use the advanced IRB approach.
Agreement about Anstaltslast (Maintenance Obligation) and Gewährträgerhaftung (Guarantee
Obligation)
In the so-called EU state aid dispute, the European
Commission and the Federal Government of Germany
reached an agreement about Anstaltslast and Gewährträgerhaftung for financial institutions under public law
on July 17, 2001. According to this agreement, Anstaltslast will be replaced by a “normal commercial relationship” between the owners and the public financial
institution concerned while Gewährträgerhaftung will
be abolished. A transitional period of four years ending
on July 18, 2005 has been agreed for the implementation of these measures. There are no changes to the
public sector bank’s liability with respect to existing
funding operations, while liabilities entered during the
transitional period will be covered by Gewährträgerhaftung, if their term does not extend beyond 2015 (grandfathering). This agreement means legal and planning
security for public-law institutions such as LB Kiel. The
agreed transitional period gives us time to successfully
adapt to the changed refinancing conditions. However,
expectations of an intensified competitive situation
faced by Germany’s Landesbanks as a result of the
agreement had led to a deterioration of the refinancing
conditions even before it was reached.
No Solution for the Liable Capital Issue yet
On the reporting date, the second dispute with the EU
Commission, which is unrelated to Anstaltslast and
Gewährträgerhaftung, had not been solved yet. This
issue concerns the amount of remuneration paid for
the integration of Wohnungsbauförderungsanstalt
(Wfa), previously owned by the State of North RhineWestphalia, into WestLB. The EU Commission considers
in its decision of July 8, 1998 the remuneration paid so
far by WestLB to the state to be inconsistent with
general market practice and has concluded that this
represents an infringement of the EU state subsidy
regulations and that WestLB is obliged to (re)pay the
balance. This has led to a number of pending proceedings at the European Court. To determine whether
other Landesbanks benefit from similar cases of illegal
state aid, the EU Commission has launched an investigation in 1999, which also covers the State of SchleswigHolstein. In 1991, Investitionsbank Schleswig-Holstein
(IB) was established as the central promotion institute
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Management Report
of the State of Schleswig-Holstein and integrated into
LB Kiel. The IB capital not used by IB for backing its
own transactions may be used as liable capital by LB
Kiel. Should the EU Commission initiate legal proceedings against LB Kiel, we are confident that possible
charges resulting from an unfavourable EU decision will
be manageable for the Bank. By selling part of LB Kiel
to WestLB and SüdwestLB with effect from January 1,
1994, the State of Schleswig-Holstein has already realized certain economic benefits which would have to be
taken into account in determining the scope of a retroactive retransfer of assets.
Hamburgische Landesbank assumes that the integration of Hamburgische Wohnungsbaukreditanstalt will
not give rise to any material changes in connection with
the liable capital issue.
LB Kiel’s Strategic Approach
“Concentration of resources” will ensure the Bank’s
standing in the capital markets after the expiry of the
state guarantees.
Challenge: Ensure the Good Standing in the Capital
Markets
LB Kiel welcomes the agreement with the EU Commission about Anstaltslast und Gewährträgerhaftung. The
challenge is now to ensure the Bank’s good standing in
the capital markets beyond 2005, i. e. the end of the
transitional period. In this context, the ratings given to
issues of Landesbanks by major rating agencies without
Anstaltslast und Gewährträgerhaftung will play a key
role. Building on the good result in fiscal 2001, we must
continue to improve the profitability of LB Kiel while
maintaining our policy of a well-balanced risk structure.
Our aim is to maintain ratings within the double-A
range.
These challenges do not catch LB Kiel unprepared.
By introducing continuously improved RAROC targets * ),
a focus on clearly defined strategic missions as well as
closer co-operation with our alliance partners, we have
set the right course for a sustained improvement of the
Bank’s profitability. In spite of more unfavourable refinancing conditions, we continuously improved our
result in the past years.
or initiated. We will expand our business in the segments in which we benefit from core competencies in
the form of special know-how or a strong customer
base. In areas in which we cannot reach the critical
mass on our own, we will co-operate with our partners
of the S-Finance Group.
The strategy of LB Kiel builds on three pillars:
1. regional focus as “the Bank for the North”,
2. international product and sector specialist,
3. further expansion of its capital market activities.
1. The Bank for the North
Building on our market leadership in the State of
Schleswig-Holstein, we focus on northern Germany and
the Baltic Sea region. Our core competence builds on
our strong regional franchise which is currently being
expanded. Our aim is to become the market leader in
the economically closely linked metropolitan region
Hamburg-Schleswig-Holstein in co-operation with
Hamburgische Landesbank and the savings banks. In
northern Germany, we primarily offer financing pro-
The Programme: Concentration of Resources
Consequently, the “Concentration of resources” programme decided by the Managing Board in October
2001 and launched in November 2001 in response to
the agreement with the EU Commission on July 17 is
not so much a strategic reorientation than a review,
adaptation and expansion of the measures already taken
*)
risk-adjusted profitbility targets for the business units
Management Report
ducts and a growing range of consulting services for
medium-sized companies and real estate clients. In our
product range for the regional savings banks, we are
replacing our former simple long-term refinancing
products with innovative products for the structuring
and management of the savings banks’ balance sheets
and by supporting them to offer their clients attractive
products. The savings banks and their clients will thus
also benefit from the expansion of our capital market
activities. We are gradually expanding our position as
one of the leading international players in Scandinavia
and the Baltic states. In addition to corporate clients,
we especially serve small and medium-sized financial
institutions in Denmark and Norway. We support these
banks, which compete with the major domestic players,
with services similar to those provided to the savings
banks in Schleswig-Holstein.
2. International product and sector specialist
In the international markets, we focus on the transport
(ship, aircraft, railway and logistics finance) and real
estate sectors. Our corporates’ division concentrates
on energy/utility, health, leasing refinancing and infrastructure financing. The division Financial Institutions/
International Finance focuses on banks, insurance
companies and states, but also seizes attractive business
opportunities with international companies.
3. Established player in the international capital
markets
We have refocused our capital market activities. The
separation of liquidity and maturity risks enables us to
exploit windows in the market and thereby reduce our
refinancing costs. We furthermore use asset backed
securities (ABS) and derivative products to optimize
the Bank’s risk and return structure. These capital
market products have also increasingly become an
integral part of the financing concepts developed for
our clients. Our capital market activities hence support
the core competencies of our two other pillars. At the
same time, they make a substantial contribution to our
profit. At the beginning of the current fiscal year, we
successfully raised core capital from international
investors.
The management concept used to back the above
strategy is largely based on the RAROC approach. The
allocation of equity capital to the individual business
units of LB Kiel is optimized by means of RAROC
targets.
Business Development
LB Kiel continued its policy of qualitative growth and expanded its market position in profitable market segments.
As a result, the Group operating profit after risk provisions
and evaluation increased by 17.4 % to € 362.6 million.
Net Assets and Financial Position:
Qualitative Growth
In 2001, the LB Kiel Group continued on the route of
qualitative growth, i. e. the targeted expansion of our
market position in profitable market segments. Accordingly, the Group’s business volume rose by 12.2 % to
€ 159.5 (2000: 142 .1) billion, while the credit volume
increased by 11.4 % to € 157.2 (2000: 141.1) billion.
The Group’s total assets were up € 12.9 billion or
10.1 % to € 141.0 (2000: 128.1) billion. In addition to
LB Kiel, the Group annual accounts include Landesbank
Schleswig-Holstein International S. A. (LI), Luxembourg,
LB Schleswig-Holstein Finance B.V., Amsterdam, Gudme
Raaschou Bankaktieselskab, Copenhagen, the 49.5 %
stake in Hamburgische Landesbank and – for the first
time – the Schleswig-Holstein casinos.
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Management Report
The Bank also continued to grow. Its business volume
climbed 14.6 % to € 104.5 (2000: 91.2) billion, while the
credit volume was up 12.9 % to € 102.6 (2000: 90.9)
billion. At year-end, the Bank’s total assets amounted
to € 91.8 (2000: 82.1) billion. This represents an increase by 11.8 % or € 9.7 billion. LB Kiel’s annual accounts
include Investitionsbank Schleswig-Holstein (IB) and
Landes-Bausparkasse (LBS). IB and LBS are legally dependent central divisions which each compile annual
accounts of their own.
Securities and Loans and Advances to Customers
as Growth Drivers
The strategy of qualitative growth is clearly reflected in
the development of the asset positions on the Group’s
and Bank’s annual accounts. While loans and advances
to banks at Group level remained at the previous year’s
level of € 32.4 (2000: 32.4) billion, the portfolio of
securities grew by an above average 18.8 % to € 41.0
(2000: 34.5) billion at year-end 2001. Loans and advances to customers, the largest asset item, also climbed
strongly by 10.2 % to € 64.0 (2000: 58.1) billion.
At Group level, loans secured by ship mortgages,
which increased by 20.2 % to € 7.9 (2000: 6.6) billion,
as well as other loans and advances to customers,
which were up 18.4 % or € 4.5 billion to € 28.7 (2000:
24.2) billion, were the main growth drivers in the client
business. Loans and advances secured by mortgages
grew at a below average rate of 5.7 % to € 13.8 (2000:
13.0) billion. At € 13.6 billion, municipal loans were
virtually unchanged on the previous year. The percentage of domestic and foreign borrowers changed slightly.
Loans and advances to foreign customers accounted for
28.3 % (2000: 25.1 %) of total loans and advances to
customers.
At Bank level, the asset items developed as follows:
Loans and advances to banks increased by a slight 1.4 %
to € 22.5 (2000: 22.2) billion, while loans and advances
to customers rose by 11.6 % to € 42.2 (2000: 37.8)
billion. The portfolio of securities grew by 24.3 % to
€ 23.5 (2000: 18.9) billion.
At Bank level, loans and advances secured by ship
mortgages also climbed 20.0 % to € 3.6 (2000: 3.0)
billion. Other loans and advances to customers increased as well by 20.2 % or € 3.3 billion to € 19.6 (2000:
16.3) billion. Similar to the development at Group level,
the Bank’s municipal loans changed only slightly to
€ 11.2 (2000: 11.7) billion. Loans and advances secured
by mortgages were up 13.2 % to € 7.7 (2000: 6.8)
billion.
As regards off-balance sheet transactions, the Group’s
nominal volume of financial derivatives increased at an
annual rate of 25 % to now € 208 billion. However, the
risk measured in terms of credit risk equivalents declined to € 1.0 (2000: 1.1) billion. This development shows
that LB Kiel continued to rely on a conservative hedging-oriented approach to financial derivatives business.
Interest-rate derivatives accounted for almost three
quarters of the volume, while currency derivatives
accounted for one quarter. Equity and other price risks
remained negligible. At year-end, the nominal volume of
credit derivatives stood at € 6.4 (2000: 3.8) billion.
Refinancing Structure Change Only Slightly
The refinancing structure of the LB Kiel Group did not
change materially in 2001. Own issues remain the most
important long-term refinancing source both of the
Group and the Bank. At year-end 2001, the Group’s
portfolio of bearer bonds and registered bonds to
customers amounted to € 52.1 (2000: 49.1) billion.
Bearer bonds, which are carried under certificated
liabilities, accounted for € 44.1 (2000: 40.5) billion
thereof. Registered bonds carried under liabilities to
customers amounted to € 8.0 (2000: 8.6) billion. Liabilities to customers totalled € 28.8 (2000: 24.9) billion.
Liabilities to banks also made a key contribution to
refinancing. At year-end 2001, they stood at € 56.7
(2000: 51.9) billion.
The annual accounts of the Bank show a similar
structure. In addition to traditional own issues including
mortgage bonds and municipal bonds, the Bank refinanced its activities by perpetual silent participations qualifying as core capital, profit-sharing rights and subordinated debt which were placed with German savings banks,
other selected institutional investors and the State of
Schleswig-Holstein.
The Bank issued short-term and medium-term
foreign currency securities under its Global Medium
Term Note (GMTN) programme. LB Kiel furthermore
uses a Euro Commercial Paper (ECP) and a US Commercial Paper (USCP) programme.
Management Report
Group Balance Sheet 1997 – 2001
€ million
As at December, 31
2001
2000
1999
1998
1997
141
32,390
64,042
41,036
324
1,363
1,724
241
32,369
58,115
34,455
200
1,366
1,339
287
28,869
52,692
30,083
186
1,322
1,709
117
27,758
46,936
22,732
154
1,459
1,139
165
25,357
40,888
20,813
96
1,453
566
141,020
128,085
115,148
100,295
89,338
56,744
28,767
44,133
1,363
2,012
1,113
143
4,282
2,463
51,915
24,914
40,541
1,366
1,758
1,123
110
3,692
2,666
48,833
22,634
34,027
1,322
1,464
987
72
2,907
2,902
43,519
21,267
27,480
1,459
1,127
499
19
2,266
2,659
35,971
18,781
27,272
1,453
1,113
446
–
2,152
2,150
Total liabilities
141,020
128,085
115,148
100,295
89,338
Business volume
159,511
142,091
127,981
111,926
100,330
Assets
Cash, debt instruments issued by public institutions and bills of
exchange eligible for refinancing
Loans and advances to banks
Loans and advances to customers
Portfolio of securities
Equity investments in affiliated and non- affiliated companies
Trust assets
Other assets
Total assets
Liabilities
Liabilities to banks
Liabilities to customers
Certificated liabilities
Trust liabilities
Subordinated debt
Profit-sharing rights
Fund for general banking risks
Equity capital *)
Other liabilities
*)
includes the net retained earnings
21
22
Management Report
Equity Capital Development: Group Liable Capital
Increased to ¤ 7 Billion
The Group’s liable capital consists primarily of onbalance-sheet equity capital and the fund for general
banking risks (core capital) as well as subordinated debt
and profit-sharing rights (supplementary capital). As at
December 31, 2001, the Group’s liable capital amounted
to € 7.0 billion (excl. allocations to reserves from the
2001 net income), which represents an increase of €
0.7 billion on the previous year (€ 6.3 billion). € 367.5
million thereof were accounted for by perpetual silent
participations qualifying as core capital, of which € 250
million were placed with the State of Schleswig-Holstein. The remaining increase in liable capital was attributable to the assumption of subordinated debt as
well as an increase in profit-sharing rights.
At the beginning of 2002, LB Kiel started to place
additional perpetual silent participations with international investors, as it has been authorized to place
approx. € 1.5 billion at Group level and approx. € 1 billion
at Bank level. The placement process has so far been
successful. LB Kiel’s core capital basis for the three-year
planning period is good.
On the balance sheet date, the ratio between own
funds qualifying as core capital and risk-weighted assets
as well as market price risk positions (solvency ratio)
stood at 9.4 % (2000: 10.2 %) for the Group and 9.7 %
(2000: 10.5 %) for the Bank. The solvency ratio of the
LB Kiel Group always exceeded 9 % during the year
under review.
Solvency ratio
Principle I – Bank
Principle I – Group
Core capital ratio
Bank
Group
31/12 / 2001
31/12 / 2000
9.7 %
9.4 %
10.5 %
10.2 %
31/12 / 2001
31/12 / 2000
5.9 %
5.5 %
6.3 %
5.9 %
Earnings Development: Positive Earnings Trend
Continued
In 2001, LB Kiel continued the positive profit development of past years. In a difficult economic environment,
net income before taxes increased by a clear 17.4 % or
€ 53.7 million to € 362.6 (2000: 308.9) million. In the
same period, the Group’s return on equity * ) declined
slightly from 10.4 % to 9.8 % before taxes. In this context, it has to be taken into account that the underlying
on-balance-sheet equity capital surged 21.6 % to € 4.0
billion.
The Bank also reported a positive development:
While net income before taxes increased from € 149.7
million to € 218.6 million, the Bank’s return on equity
improved from 8.2 % to 8.7 %.
Operating Profit Increased Clearly Both at Group
and Bank Level
The Group’s operating profit before risk provisions
and evaluation rose by € 192.1 million or 40 % to
€ 671.9 (2000: 479.8) million. While earnings increased
by € 263.6 million, expenses were up € 71.5 million.
Net interest income, but also net income from trading
and other operating income again made a key contribution to this favourable development. On the balance
sheet date, the Bank’s operating profit before risk
provisions and evaluation stood at € 365.6 (2000:
235.5) million.
*)
calculated as follows: (net income before taxes + allocations to reserves
pursuant to sec. 340 g of the German Commercial Code) / (average on-balance-sheet
equity capital – net retained earnings + average reserves pursuant to sec. 340 g of the
German Commercial Code )
Management Report
Considerable Increase in Net Interest Income and
Net Income from Trading Doubled
In 2001, net interest income rose by 19.6 % or € 146.9
million at Group level, making a significant contribution
to the earnings increase. Strong increases were reported in the client business, where strict RAROC management enabled us to generate higher margins. The capital
market units also made very gratifying contributions.
Net interest income amounted to € 898.0 (2000: 751.1)
million at Group level and € 466.6 (2000: 383.6) million
at Bank level.
Net commission income remained almost unchanged
on the very high previous year’s level. We were able to
almost fully compensate for the slump in commissions
from securities transactions with a strong increase in
commissions from international lending activities. Net
commission income reached € 137.7 (2000: 141.6)
million at Group level and € 66.6 (2000: 64.4) million at
Bank level.
Against the background of a volatile market, net
income from trading more than doubled at both Group
and Bank level to € 58.0 (2000: 27.3) million and € 38.5
(2000: 16.0) million, respectively.
Special Income Used to Strengthen Disclosed
Reserves and Fund for General Banking Risks
Other operating income rose by an impressive € 89.9
million to € 75.0 (2000: -14.9) million at both Group
and Bank level. Next to the first-time consolidation of
the Schleswig-Holstein casinos, this was primarily attributable to two factors: On the one hand, the Group
received a tax credit for previous years and, on the
other hand, LB Kiel disclosed hidden reserves in the
context of a sale-and-leaseback transaction involving
the sale of land and buildings used by the Bank. This
special income was used to further strengthen the
disclosed reserves and hence the core capital basis of
the Bank and the Group. In fiscal 2001, other operating
income at Bank level increased to € 88.8 (2000: 35.7)
million.
Further Expansion of the Workforce …
In fiscal 2001, LB Kiel continued to invest in human
resources with special qualifications in order to strengthen its market position in strategic business segments.
As per year-end 2001, the headcount of the LB Kiel
Group (excl. HLB) rose by 96 to 2,457 (2000: 2,361)
people. Including the first-time consolidation of the
Schleswig-Holstein casinos, Group staff numbers increased to 2,652. In the same period, HLB’s headcount
increased by 264 from 2,268 to 2,532 people.
Group personnel expenses were up 14.3 % to € 262.4
(2000: 229.6) million, while personnel expenses at Bank
level rose by 8.7 % to € 150.8 (2000: 138.7) million. This
increase was due to the higher percentage of highly
qualified staff, an increase in standard wages of some
3 %, additional pension provisions as well as the consolidation of the casinos.
… and Continued Optimization of the Controlling
Systems and Processes
The renewed strong increase in operating expenses by
19.8 % to € 234.4 (2000: 195.7) million at Group level
and by 14.8 % to € 144.1 (2000: 125.5) million at Bank
level was attributable to the fact that LB Kiel not only
continued, but once again pushed ahead the optimization of its systems and processes. In view of the necessity to ensure the Bank’s access to the capital markets
beyond 2005, new projects were launched (e. g. optimization of lending processes as well as development of
a loan portfolio management system) in addition to
existing projects for the modernization of IT systems
and the implementation of legal requirements (e. g.
Basle II rating approach, IAS accounting). The difference
between the development of operating expenses at
Bank level and at Group level was primarily attributable
to the activities of HLB in connection with the establishment of a securities settlement bank.
23
24
Management Report
Cost-Income Ratio Improved to 42.5 %
At the bottom line, the increase in operating expenses
was more than offset by the positive earnings development, so that the cost-income ratio improved significantly at both Group and Bank level. The Bank’s costincome ratio improved from 52.9 % to 44.6 %, while the
Group even achieved a ratio of 42.5 % (2000: 47.0 %),
which is very good.
Significantly Higher Risk Provisions
The balance of risk provisions and evaluation increased
noticeably at both Group and Bank level. At Group
level, it rose by 81.0 % from € 170.9 million last year
to € 309.3 million. In addition to higher write-downs
and value adjustments – due to the economic slowdown –, this increase was, however, also attributable to
higher allocations to taxed reserves. Allocations to
reserves pursuant to sec. 340 f /g of the German Commercial Code totalled € 99.1 (2000: 59.2) million.
Write-downs and value adjustments on the portfolio
of securities increased to € 74.4 (2000: 6.2) million,
mainly as a result of issuers’ deteriorated creditworthiness. Loan loss provisions climbed € 64.7 million to
€ 169.8 (2000: 105.1) million. At Bank level, risk provisions and evaluation rose by 71.3 % from € 85.8 million
to € 147.0 million. € 28.4 (2000: 2.3) million thereof
were accounted for by write-downs and value adjustments on the portfolio of securities, while loan loss
provisions accounted for € 80.2 (2000: 65.8) million.
€ 25 million of the Group reserves formed pursuant
to sec. 340 f of the German Commercial Code cover
risks arising from the insolvency proceedings instituted
against by KirchMedia on April 8, 2002 after preparation
of the Group annual accounts. The annual accounts of
the Bank include individual value adjustments for this
exposure. At both Group and Bank level, sufficient
provisions were established for all risks.
Operating Profit after Risk Provisions and Net
Income Increased Significantly
Thanks to its positive earnings position, LB Kiel posted
a strong increase in operating profit despite higher risk
provisions. While Group operating profit rose by 17.4 %
to € 362.6 (2000: 308.9) million, operating profit at
Bank level even surged 46.1 % to € 218.6 (2000: 149.7)
million.
The tax reform and the first-time reporting of
deferred taxes resulted in a considerable decline in
taxes on income and revenue. After taxes of € 51.2
(2000: 130.9) million and dividends on silent participation holdings of € 137.4 (2000: 93.7) million, net
income at Group level stood at € 174.0 (2000: 84.3)
million. The Bank’s net income amounted to € 123.8
(2000: 44.0) million.
Management Report
Group Statement of Income
31/12 / 2001
€ million
31/12 / 2000
€ million
1. Net interest income
898.0
751.1
146.9
19.6
2. Net commission income
137.7
141.6
- 3.9
- 2.8
3. Net income from trading
58.0
27.3
30.7
112.5
4. Administrative expenses
thereof:
- Personnel expenses
- Operating expenses
- 496.8
- 425.3
- 71.5
16.8
- 262.4
- 234.4
- 229.6
-195.7
- 32.8
- 38.7
14.3
19.8
5. Other operating income
75.0
-14.9
89.9
603.4
671.9
479.8
192.1
40.0
- 309.3
-170.9
-138.4
81.0
-169.8
- 74.4
19.7
- 99.1
18.2
- 3.9
-105.1
- 6.2
-15.6
- 59.2
26.5
-11.3
- 64.7
- 68.2
35.3
- 39.9
- 8.3
7.4
61.6
1,100.0
- 226.3
67.3
- 31.3
- 65.5
362.6
308.9
53.7
17.4
0.0
0.0
0.0
0.0
362.6
308.9
53.7
17.4
-137.4
- 93.7
- 43.7
46.6
12. Taxes on income and revenue
- 51.2
-130.9
79.7
- 60.9
13. Net income for the year
174.0
84.3
89.7
106.4
6. Operating profit before risk provisions and evaluations
7. Risk provisions /evaluations
thereof:
- Credit provisioning
- Securities
- Equity Investments
- Reserves pursuant to sec. 340 f /g German Commercial Code
- Changes to special reserve item
- Other
8. Operating profit after risk provisions and evaluations
9. Extraordinary income
10. Net income before taxes
11. Partial profits transfers
Profit Appropriation
Of the Bank’s net income of € 123.8 million, a constant
dividend of 7 % after taxes on the share capital of € 219
million will be paid out to the shareholders. A remuneration of € 3.8 (2000: 3.9) million will be paid to the
State of Schleswig-Holstein in return for the liable
Changes 2001/2000
€ million
%
capital of Investitionsbank (IB) used by the Bank. In
addition, the state will receive € 16.9 million as a dividend from IB. A total of € 89.0 (2000: 19.2) million will
be allocated to the Bank’s earnings reserves. € 81.0
million thereof will be accounted for by LB Kiel, € 3.1
million by LBS and € 4.9 million by Investitionsbank.
25
26
Management Report
Risk Report
Active risk management is an integral part of the Group’s
business management. We therefore put great emphasis on
the continuous further development of the risk measurement and risk management structures and
methodologies used throughout the Group.
Ongoing Co - operation between LB Kiel and
Hamburgische Landesbank (HLB)
In 2001, the Group-wide expansion and optimization of
our controlling tools progressed noticeably. Not least
due to the different organizational structures and EDP
systems, the development in the two subgroups, LB Kiel
and HLB, is still running independently of each other;
ongoing co-operation, however, ensures that the
methods are largely comparable. We will therefore
present the Group’s risk situation by providing a detailed description of the risk management systems of
LB Kiel followed by the key results of HLB.
Risk Management System of LB Kiel
Risk is generally understood as the possibility of future
developments having a direct or indirect negative effect
on the Bank’s financial, earnings and liquidity position.
The Bank distinguishes counterparty, market price,
liquidity, operational and other risks. The risk management process involves the development of methods and
procedures for the measurement and management of
risks which will then be used to identify, measure,
monitor and manage risks based on set limits.
LB Kiel’s risk management process is integrated into
its overall bank controlling concept, meaning that the
monitoring of risk and return potentials is closely
linked. The tools used have been developed with a view
to both economic and supervisory requirements.
In 2001, LB Kiel continued to optimize its risk
measurement and risk management procedures. With a
view to Basle II, the existing RAROC approach, the
preliminary costing process and the equity capital
allocation mechanisms have already been considerably
expanded.
The earnings and return targets set for the Bank by
its Managing Board are transferred to the internal
controlling tools of the individual organizational units
(e. g. contribution margin accounting) while ensuring an
optimum equity capital allocation. The individual organizational units are responsible for managing their business units, which includes the management of risks. This
comprehensive set of risk controlling tools enables LB
Kiel to consciously assume a well-balanced level of risk.
The Controlling department is principally responsible for this wide range of risk management tools. In
addition to the Controlling department, the risk monitoring activities of the Managing Board are supported
by Auditing and Legal department (incl. the Compliance
unit) as well as by the management teams of the market
departments and, as far as country risks are concerned,
by the department Financial Institutions/International
Finance. Since mid-2001, the newly established Middle
Office has been responsible for the operative measurement of market price risks, the monitoring of market
price risk limits and the monitoring of counterparty and
issuer risks by means of methods developed by the
Controlling department. Management of the Bank’s
major risks is additionally in the hands of the expert
committees Risk Committee, Committee for Foreign
Business and Asset Liability Committee. Decisionmaking lines, information lines and functional responsibilities have been clearly defined.
LB Kiel continued to pursue a conservative risk
strategy, attaching particular importance to a wellbalanced portfolio structure which avoids large-scale
counterparty risks as well as counterparty risk clusters.
Given that trading activities are deliberately restricted,
market price risks are negligible. Major liquidity risks do
not exist.
Management Report
Counterparty Risks
The term counterparty risk refers to a potential loss
which may result from the default or deterioration of
the credit rating of business partners, guarantors,
investments or countries. LB Kiel manages the risks
involved in exposures to individual counterparties as
well as at portfolio level.
Limits for all counterparty risks have been fixed in
line with the Bank’s risk cover potential and future
profitability. The results of the risk controlling analyses
are reported to the decision-making committees in
charge, which immediately initiate suitable measures for
the management of risks if required.
LB Kiel uses a uniform rating-based process to
measure and manage all counterparty risks. Major
elements of this process include internal rating procedures and market-related historic default probabilities.
These factors are linked with accounting data in order
to enable, for instance, segment analyses according to
different risk criteria such as sector, domicile of company, credit rating category or organizational units. The
entire risk measurement process is reviewed constantly
by means of back-testing; the risk parameters of some
units were adjusted in 2001.
Large-scale risks are monitored and managed across
the Group on a daily basis based on counterparty limits
and utilization. In addition, certain individual exposures
are evaluated by given criteria by the independent
credit office.
In 2001, the Bank optimized in particular the monitoring of individual counterparty risks of the trading units.
Key developments included the introduction of a uniform limit system for the monitoring of the Bank’s
counterparty and issuer risks. In fiscal 2002, this limit
system will also be introduced at our Luxembourg
subsidiary. In order to reduce the counterparty risks
resulting from trading activities even further, the Bank
has launched the “Netting /Collateral Management”
project. In 2001, LB Kiel concluded netting agreements
with a number of major counterparties to hedge the
counterparty and issuer risks of the trading units.
The risk which may result from the impairment in
value of equity capital due to equity investments or the
opening of new branches is managed by the corporate
development/participations unit attached to the Board
office. The focus is on so-called due diligence reviews
and ongoing target/actual comparisons of income from
equity investments. Corresponding contractual arrangements ensure that the business development can be
monitored and influenced. Internal reporting is another
tool used to monitor the risk of equity investments.
In the course of the fiscal year, the Controlling department provides regular reports detailing the critical
success factors of all equity investments to the responsible committees.
An additional country limit system controls the
country risk, which also needs to be taken into account
in conjunction with the counterparty risk. Based on an
upper limit for all Group-wide country risks, upper
limits for individual countries and country groups are
determined on the basis of a country rating. Compliance with these limits is monitored on an ongoing basis
by Financial Institutions/International Finance. Foreign
exposure primarily focus on Europe and North
America.
27
28
Management Report
As at December 31, 2001, the country portfolio had the
following structure:
Foreign exposure
in € million
Group Exposure
excl. HLB
HLB pro-rata
Group Exposure
Percentage share
in Group exposure
Europe *)
Central and Eastern Europe
Other industrialized countries
Latin America
Asia
Africa
Other
27,670.1
945.9
11,532.2
598.0
984.8
111.5
324.0
12,870.4
375.4
8,335.1
136.5
754.4
835.1
211.8
40,540.5
1,321.3
19,867.3
734.5
1,739.2
946.6
535.8
61.7
2.0
30.3
1.1
2.7
1.4
0.8
Total
42,166.5
23,518.7
65,685.2
100.0
*)
excl. Central and Eastern Europe
The cautious risk policy is reflected in the total volume of individual value adjustments:
Individual value adjustments
LB Kiel
IB (promotional bank)
LBS
LB International
HLB
*)
**)
Share of individual
value adjustments *)
General bad
debt provisions * * )
31/12 / 2000
in € million
31/12 / 2001
in € million
31/12 / 2000
in %
31/12 / 2001
in %
31/12 / 2001
in € million
227
69
4
35
626
282
81
4
41
733
0.27
1.50
0.25
0.44
0.69
0.29
1.84
0.23
0.55
0.71
35.1
15.1
0.3
–
87.1
in the credit volume
Landesbank Schleswig- Holstein International S.A. calculates global bad debt provisions
Market Price Risks
Market price risks are potential losses which may result
from future market price fluctuations of our positions
due to changes in the yield curve (interest rate risks),
exchange rates (currency risks), share prices (share
price risks) as well as prices of commodities, precious
metals and other tradable goods (other price risks).
For positions comprising options, additional risks result
from the fluctuations of the volatilities determining the
prices.
LB Kiel has adopted the value at risk (VaR) approach
to measure and control market price risks. The value at
risk projects the maximum potential change in value of
a portfolio of financial instruments which may arise due
to fluctuations of the evaluation parameters. The potential change in value is calculated in such a way that even
in a worst-case scenario it would not be exceeded with
a likelihood (confidence level) of 95 %. Time series of
Management Report
interest rates, exchange rates and securities prices over
the past 201 days are used for these projections.
The risks are measured against predefined loss limits
and reported to the Managing Board and the responsible trading units on a daily basis. New products are
constantly included in risk measurement.
LB Kiel uses a present value-oriented procedure to
record and control interest rate risks. An important
element of this procedure is the determination of an
accumulated present value, which is calculated on the
basis of the net cash flows generated by the fixedincome assets and liabilities including derivatives for
transactions subject to interest rate risks. The present
value of the calculated net cash flows is calculated on
the basis of maturity-oriented market interest rates
derived from the yield curve.
In addition to interest rate risks for main and secondary currencies, price risks for shares and investment
share certificates of the liquidity reserve are also
included in global risk management on a VaR basis.
All interest-bearing non-trading positions (incl. loan
portfolios and own issues) are also valued according to
the VaR approach based on the current maturity balance sheet using a present value-oriented method.
In order to limit the global market price risk, the
Managing Board has defined a risk limit for the Bank.
In the year under review, the risk limit was used only
moderately and complied at all times. An early warning
system which triggers corrective decisions by a predefined procedure prevents limit from being exceeded.
The stress tests performed are based on a shift in
the confidence level from 95 % to 99 %. Simulations have
shown that even with a confidence level of 99 %, the
risk cover potential was not exceeded.
In the context of statistical approaches, the “worstcase” is the most unfavourable scenario that would
have occurred for a given portfolio in the past. The
calculation of the worst-case scenario is based on the
risk parameters that would have meant the greatest
loss in value for the portfolio over the past ten years.
None of the worst-case scenarios calculated in 2001
showed an unacceptable risk for the Bank.
As per December 31, 2001, the value at risk was
€ 4.4 (2000: 4.3) million (trading in the narrow sense).
The average VaR limit utilization was 18.9 % (2000:
30.2 %) for trading risks, with the minimum at 7 %
(2000: 19 %) and the maximum at 27 % (2000: 42 %).
Daily utilization of the VaR limit of
LB Kiel ( trading in the narrow sense)
from 1/1/2001 to 28 /12/2001
in %
Average
30
25
20
15
Back -Testing and Worst- Case Scenarios
Back-testing comprises a comparison between the
maximum loss to be expected on one trading day,
the VaR, and the actual change in the result for the
individual trading portfolios.
Each test is based on a period of 100 trading days.
In 2001, the Bank identified one “outlier”; it was due
to technical problems which have been eliminated. Even
after the events on September 11, 2001, the Bank saw
no need to change its back-testing procedure.
10
5
0
9/3/2001
14/6/2001
12/9/2001 12/12/2001
29
30
Management Report
From January 2, 2001 to May 10, 2001, the VaR limit was
€ 14.4 million; after a reduction to € 11.9 million until
September 11, 2001, the limit was raised to € 17.4
million until the end of the year in connection with a
change of the internal structure and in line with the
Bank’s profitability. The average daily value at risk for
the three risk categories is shown below:
Average daily value at risk
in € thousands
Interest rate risks
Currency risks
Other market price risks
1/1/ up to
31/12/2001
2,185
114
259
1/1/ up to
31/12/2000
4,421
165
400
Average calculation based on 255 trading days
The daily performance of trading
operations in 2001 is shown below:
Daily performance in 2001 in € thousands
100 (Frequency)
Liquidity Risks
The term liquidity risk describes the risk of the Bank
becoming unable to maintain sufficient liquidity and
hence unable to properly meet its payment obligations
on a timely basis and in full. Liquidity risks are taken
into account in the liquidity strategies and plans.
The Bank’s Asset Liability Committee is responsible
for defining the conditions and strategies for planning
and controlling liquidity. Sole responsibility for the management of supervisory requirements (e. g. minimum
reserve) and economic risks lies with the Treasury unit.
Treasury (liquidity management) takes the measures
required for implementation, especially the covering of
financing requirements as well as day-to-day cash management. Compliance with supervisory regulations is
monitored by controlling department. As at December
31, 2001, the liquidity ratio according to the Principle II
of the German Federal Banking Supervisory Office was
1.29 (2000: 1.15). It never fell below the required
minimum value of 1.0 during the year under review.
Operational Risks
90
80
70
60
50
40
30
20
10
0
more
up to up to up to up to up to up to up to up to up to than
-4000 -2000 -1000 -500 - 0,1 500 1000 2000 4000 4000
The highest daily loss incurred in the year under review
was € 2.05 (2000: 2.62) million.
The term operational risk comprises potential direct or
indirect losses resulting from human, organizational or
technical failure or inadequacies or external factors.
In 2001, the Bank continued to record its key operational risks which were generally considered to be
negligible.
In view of the Basle II consultation papers, LB Kiel
calculated that, operational risks will play a minor role
in terms of future equity capital requirements based on
the basic indicator approach.
In the IT area, the Bank adapted the infrastructure
for the secure use of the Internet to the growing
requirements of the Bank’s users and significantly
increased its overall availability by means of faulttolerant components. Another key project was the
development of a comprehensive encryption concept
for LB Kiel which will form the basis for the implementation of corresponding technical measures in the years
to come. In additions, the systems protecting the Bank
against attacks via the Internet were updated and
completed.
The Bank has launched extensive projects aimed at
improving its management, IT equipment and processes.
LB Kiel has a uniform, bank-wide system for the ma-
Management Report
nagement of project risks. Based on proposals submitted by the Project Commission, the Managing Board
decides which projects will be executed, taking interdependencies between the different projects into account.
The Project Controlling unit monitors compliance with
the total project budget, resources and schedule. In
order to avoid the misallocation of resources, projects
are combined to project clusters. At regular meetings,
the project committees are informed about the current
status of the projects as well as of important or critical
events which influence the projects. Review teams
consisting mainly of experts of the Bank have been
formed to assure the quality of the project results.
The reports to be written on completion of a project
include the experience gained and are made available to
other projects.
To counteract risks in the personnel area, the Bank
has established suitable programmes for the selection,
training and employment as well as for the promotion
and further development of its employees.
These programmes focus on identifying the potential
of the Bank’s employees and promoting their personal
and professional qualification.
Legal Risks
To counteract legal risks, LB Kiel uses nationally and
internationally acknowledged standard framework
agreements ( ISMA, ISDA, DRV ), scrutinizes individual
agreements and regularly adapts contractual documentation to current legislation and applicable courtdecisions; in addition, the Bank’s own legal department
supports the market departments.
On July 17, 2001, the European Commission and the
Federal Government of Germany reached an agreement
about guarantee obligation (“Gewährträgerhaftung”)
and maintenance obligation (“Anstaltslast”)
A transitional period of four years was set in which
the measures agreed upon are to be implemented.
There are no changes to the public-sector banks’
liability with respect to existing funding operations,
while liabilities entered during the transitional period
will be covered by Gewährträgerhaftung, if their term
does not extend beyond 2015.
This means legal and planning security for the Bank.
The agreed transitional period gives LB Kiel time to
successfully adapt to the changed refinancing conditions.
Risk Management Process and Risk Situation of
In 2001, Hamburgische Landesbank has revised the
strategic and organizational orientation of its risk
management process and thereby further improved the
foundations for the management of its business.
HLB’s tools for the management of market price,
counterparty and liquidity risks are largely comparable
to those of LB Kiel. Several projects taking into account
the future requirements resulting from Basle II have
been launched. In anticipation of MaK/Basle II, HLB has
established an independent rating unit. Another focus
was on the development and expansion of its processes
for the measurement and monitoring of operational
risks. Other bank-wide projects are currently being
implemented to ensure that negative developments of
the HLB’s risk structure are detected early on and
considered in the Bank’s risk management.
In 2001, HLB’s risk strategy continued to be characterized by a cautious business policy. Retaining its strict
evaluation principles, HLB established sufficient provisions for all discernible risks. At year-end, risk provisions for counterparty risks (individual value adjustments and provisions) amounted to € 743 (2000: 672)
million. The Bank’s liquidity ratio (Principle II in accordance with sec. 11 of the German Banking Law) was
1.3 at year-end. Exposure to illiquid markets remained
limited. HLB’s liable capital in accordance with the
German Banking Law – incl. supplementary capital –
after profit appropriation amounted to € 5,114.5 million. Its overall Principle I ratio stood at 10.2 % (ratio of
weighted risk assets incl. market risk positions to liable
capital at year-end 2001).
Focus for 2002
In 2002, the Group will continue to optimize its management systems. In addition to the further integration
of the requirements resulting from MaK and Basle II,
LB Kiel will primarily develop its concepts and technical
systems towards a uniform bank-wide risk measurement process.
31
32
Management Report
Personnel
LB Kiel continued to expand its workforce against the
general industry trend.
As at December 31, 2001, the number of permanently employed people of the LB Kiel Group (excl.
HLB) stood at 2,457 (2,189). This included for the
first time 195 employees of the newly consolidated
Schleswig-Holstein casinos. Against the general
industry trend, we also increased our headcount in
the banking divisions. We hired 260 people and
created 73 new jobs, especially in IT/Organization,
Capital Markets, Asset Liability Management, Corporate Finance and Financial Institutions/International
Finance. Some 300 foreign employees work in the
LB Kiel Group (excl. HLB).
In 2002, we will again expand our workforce
against the general trend. We plan to increase our
headcount by another 60 people, so that 200 new
appointments will be required taking fluctuation
into account.
Key staff figures
(LB Kiel Group excl. HLB)
Total staff employed
of whom female
Regular staff
thereof:
Bank excl. LBS and IB
Landes-Bausparkasse (LBS)
Investitionsbank (IB)
LB Schl.-Holst. Int. Luxemburg
Gudme Raaschou
Casinos
Apprentices
Temporary staff/trainees
Staff on maternity
and parent leave
Ratio of part-time staff (in %)
Average age
Retired staff and surviving
dependents/Employees
in early retirement
New appointments
As at December, 31
2001
2,652
1,257
2000
2,361
1,115
1999
2,264
1,097
2,457
2,189
2,097
1,561
215
323
84
79
195
1,501
197
324
82
85
–
1,447
189
322
68
71
–
84
111
96
76
94
73
77
14,9
40
91
13,6
40
83
12,8
41
984
262
956
228
940
190
Outlook
Due to our clear strategic orientation and established market position, we
expect the positive earnings trend to continue in the current fiscal year.
We target a return on equity of 15 % before taxes for fiscal 2004. The shareholders of LB Kiel and Hamburgische Landesbank have mandated the
Managing Boards of the two banks to develop a concept for their merger.
Cautious Optimism for 2002
In spite of the imminent challenges, we look ahead with
cautious optimism. We expect the implementation of
our “Concentration of resources” programme to
provide important stimulus for our future business
development. We have a clear strategy based on three
pillars: 1. “Bank for the North”, 2. International product
and sector specialist and 3. established player in the
international capital markets. We will build on these
three pillars to continue our qualitative growth.
The emerging economic recovery should support this
development. We therefore expect our positive
earnings trend to continue in 2002.
Management Report
Business Focus
In the Baltic Sea region, we will push ahead our corporate finance activities by expanding our network of
local units: LB Kiel Corporate Finance, Gudme Raaschou
and PCA Corporate Finance. We plan to open a branch
in New York in the second half of the current year in
order to expand our refinancing base in the U.S. money
and capital markets. The New York branch will furthermore be developed into a LB Kiel competence centre
for transport finance (excl. ships) and into a base for
our growing U. S. real estate banking business. In Europe
besides Germany, our real estate strategy focuses on
France, Great Britain, Scandinavia and selected central/
eastern European locations. Moreover, we intend to
pool all syndication activities of LB Kiel in London. We
want to translate our established position in the international ship finance sector into a growing number of
lead and co-lead roles.
Active management of the Bank’s portfolios should
enable us to considerably improve our profitability
without increasing the risk. We have therefore started
to establish a portfolio management system for credit
risks with the aim to actively manage large parts of the
balance sheet.
Higher Return on Equity Targeted
The return on equity will follow the resulting positive
earnings trend with a certain delay because we plan
another strong increase of our equity capital base by
placing additional perpetual silent participations with
national and international investors. In the first quarter
of the current year, we have already expanded our
international investor base by placing silent participations of € 500 million. The strengthening of LB Kiel’s
equity capital base, which will prepare it for the imminent challenges, will result in a partial and temporary
dilution of the return on equity. The Managing Board
has decided to target a return on equity of 15 % before
taxes in 2004.
Spin - off of Investitionsbank
The Bank’s governing bodies have instructed the Managing Board of LB Kiel to develop a concept for the
spin-off of Investitionsbank Schleswig-Holstein into an
independent promotion institute owned by the State of
Schleswig-Holstein as its sole shareholder. The spin-off
of Investitionsbank has to be approved by the State
Parliament of Schleswig-Holstein. The equity capital
measures planned for the current fiscal year will among
others replace part of the liable capital so far provided
by Investitionsbank.
Merger Concept
On March 11, 2002, the shareholders of LB Kiel have
furthermore mandated the Managing Board of LB Kiel
to develop a concept for a merger with Hamburgische
Landesbank in co-operation with the Managing Board of
the latter. The Managing Board of Hamburgische Landesbank has received a similar mandate from the shareholders of Hamburgische Landesbank – the Free and
Hanseatic City of Hamburg and LB Kiel. In addition to
the bodies of both banks, the merger has to be approved by the State Government of Schleswig-Holstein
and the Senate of the Free and Hanseatic City of Hamburg which have to sign a state treaty to this effect.
This state treaty has to be approved by both parliaments. The merger can only take place after the state
treaty has entered into force.
33
Geschäftsbank
34
LB Kiel Geschäftsbank
The LB Kiel Geschäftsbank figures give an overview of LB Kiel’s commercial bank activities.
In order to provide a meaningful overview of LB Kiel’s
commercial bank activities, we have included the figures
of our two wholly-owned subsidiaries, Landesbank
Schleswig-Holstein International S. A., Luxembourg, and
Gudme Raaschou Bankaktieselskab, Copenhagen, in the
Geschäftsbank figures. In contrast, the figures exclude
the activities of Investitionsbank Schleswig-Holstein,
which is an economically and organizationally independent but legally dependent central department of
LB Kiel and the central funding and promotion institute
of the State of Schleswig-Holstein.
Balance Sheet of the Geschäftsbank * ) 1997 – 2001
€ million
As at December, 31.
2001
2000
1999
1998
1997
Assets
Cash, debt instruments issued by public institutions and
bills of exchange eligible for refinancing
Portfolio of securities
Equity investments in affiliated and non-affiliated companies
Trust assets
Other assets
98
23,796
39,633
26,770
919
69
622
208
24,051
35,272
22,022
827
78
457
95
21,781
30,727
19,222
823
85
596
82
20,318
27,191
13,136
813
100
387
156
18,832
23,554
12,270
784
111
367
Total assets
91,907
82,915
73,329
62,027
56,074
Liabilities
Trust liabilities
Subordinated debt
Profit-sharing rights
Equity capital * * )
Other liabilities
40,453
13,157
33,569
69
1,260
686
89
1,984
640
35,844
12.740
30,077
78
1,047
671
65
1,513
880
32,187
11,804
26,264
85
989
565
40
811
584
28,764
10,562
20,348
100
747
153
–
718
635
23,827
9,321
20,621
111
797
154
–
698
545
Total liabilities
91,907
82,915
73,329
62,027
56,074
*)
**)
Bank (incl. LBS) excluding Investitionsbank and including
Landesbank Schleswig-Holstein International S.A. and Gudme
Raaschou Bankaktieselskab
includes the net retained earnings
This page and the following page are not part of the Management Report.
Geschäftsbank
Statement of Income of the Geschäftsbank
31/12/2001
€ million
31/12/2000
€ million
503.6
400.1
103.5
25.9
2. Net commission income
84.5
86.9
- 2.4
- 2.8
3. Net income from trading
48.2
22.6
25.6
113.3
4. Administrative expenses
thereof :
- Personnel expenses
- Operating expenses
- 293.6
- 260.0
- 33.6
12.9
-152.7
-140.9
-136.7
-123.3
-16.0
-17.6
11.7
14.3
57.4
23.6
33.8
143.2
400.2
273.3
126.9
46.4
-177.9
- 94.1
- 83.8
89.1
222.3
179.2
43.1
24.1
0.0
0.0
0.0
0.0
10. Net income before taxes
222.3
179.2
43.1
24.1
11. Partial profits transfers
- 75.8
- 32.3
- 43.5
134,7
12. Taxes on income and revenues
- 26.8
- 82.6
55.8
- 67,6
119.7
64.2
55.5
86,4
1. Net interest income
6. Operating profit before risk provisions/evaluations
7. Risk provisions /evaluations
8. Operating profit after risk provisions/evaluations
9. Extraordinary income
Geschäftsbank with a Good Result
In the year under review, earnings of LB Kiel’s Geschäftsbank developed even slightly better than at Group level.
Net interest income and net income from trading were
also up considerably and risk provisions increased
significantly. The provisions established in connection
with the insolvency proceedings instituted by KirchMedia on April 8, 2002 have already been taken into
account. Administrative expenses increased less than at
Group level. At 46.4 % and 24.1 %, respectively, the
Changes 2001/2000
€ million
%
Geschäftsbank’s operating profit before and after risk
provisions /evaluations grew stronger than at Group
level (40 % and 17.4 %, respectively). Net income for the
year surged 86.4 % at the Geschäftsbank level (Group:
106.4 %). Given that in 2001, the Geschäftsbank accounted for almost all silent participations placed to strengthen LB Kiel’s equity capital basis, partial profit transfers
increased comparatively stronger than at Group level.
35
Strategic Missions
Strategic Missions
39
Bank for the North
39
- Regional Focus on Northern Germany
45
- Regional Focus on the Baltic Sea Region
49
International Product and Sector Specialist
49
- Structured Finance
51
- Ship Finance
53
- Real Estate Banking
57
- Financial Institutions/International Finance
59
Partner in the International Capital Markets
62
Landesbank Schleswig- Holstein International S. A. (LI )
63
37
Strategic Missions
Bank for the North
We are the leading Bank in our home region of Schleswig-Holstein
where our activities cover our three functions as commercial bank,
central clearing institution for the savings banks and state and
municipal bank. We are gradually expanding our position as one of
the leading foreign banks in northern Europe and the Baltic countries focusing on syndicated loans, real estate finance, structured
finance and corporate finance products.
REGIONAL FOCUS ON
N O RT H E R N G E R M A N Y
Successful Corporate Clients Business in spite of an
Economic Downturn
In spite of the weak economic environment, our corporate clients business developed favourably. Lower interest
rates supported corporates’ investment spending. New
business amounted to € 0.9 (2000: 1.4) billion, with the
focus on higher margins rather than higher volumes.
Total claims rose by 11 % to € 5.1 (2000: 4.6) billion.
Companies in Schleswig-Holstein accounted for over
50 % thereof.
In our northern German core region, we focus on
medium-sized companies with the aim to become their
core bank. In the year under review, we continued to
intensify our client relationships. Our approach to
support our customers by providing short-term loans
as well as a growing number of deposit-taking products
and services in addition to traditional medium-term and
long-term investment finance was very well received by
our clients. In addition to our regional focus, we continued to specialize on the health care, energy as well as
utilities and waste management sectors, which we serve
on a nationwide scale.
2002: New Corporates Unit Operates on an
International Scale
The strategic measures taken with a view to concentration of resources included the reorientation of our
corporate clients business at the beginning of 2002.
As a financing and structuring specialist supporting
medium-sized companies in our core region, we will, on
the one hand, expand our range of consulting services
for company acquisitions and capital market transactions in close cooperation with the newly established
LB Kiel Corporate Finance GmbH. On the other hand,
we decided to no longer distinguish between domestic
and international corporate business and pool all our
corporate clients activities in the energy, utilities and
waste management, health and leasing refinancing
sectors in the Corporates unit.
Loans to Corporate Clients
Total claims in € billion
6
5
4
3
2
1
0
1997
1998
1999
2000
2001
39
40
Strategic Missions
E-Business Products Optimized
We will continue to optimize our range of e-business
products, which includes Cash Management, our management tool for companies operating on a national or
global scale as well as for clients with high liquidity
management requirements. We furthermore offer our
clients a payment system for Internet shops (ePayment)
which enables secure settlement of the growing number
of Internet sales. Our product range also includes
interest hedging products.
Based on our strategic reorientation, we expect our
corporate clients business to develop favourably going
forward.
Equity Investment Business Expanded
We identified equity investments in medium-sized
companies as a market offering considerable growth
potential. Consequently, LB Kiel expanded its activities
in the private equity and venture capital segment by
establishing a dedicated Equity Investment unit in the
year under review. Schleswig-Holsteinische KapitalBeteiligungsgesellschaft mbH (KBG), one of the oldest
equity investment companies in the Federal Republic of
Germany which has supported medium-sized companies
for over 30 years, formed the basis of the new unit. In
addition, we founded LB Kiel Unternehmensbeteiligungsgesellschaft (UBG) which offers open equity
investments as supplementary financing.
Next to companies which need new equity capital
for succession, management buyouts or expansions,
both KBG and UBG invest in young future-oriented
companies. Another important business segment are
investments in private equity funds. In addition to
attractive returns, these offer the possibility of coinvestments.
In fiscal 2001 (as at Sept. 30), we made 14 new
equity investments and invested in 9 private equity
funds. 2002 promises good business opportunities.
We expect the prices for equity investments to recover
only slowly from their drastic fall in the year under
review. It should therefore remain possible to make
new equity investments at reasonable prices for quite
some time.
New Business Segment Corporate Finance
Established
In 2001, we established our new business segment
Corporate Finance, with LB Kiel Corporate Finance
GmbH taking up operations on January 1, 2002. Hamburgische Landesbank will hold an equal equity interest
in this company. After the development of our corporate finance activities in Scandinavia, we have now positioned ourselves in this business segment in Germany with
the aim to further increase our net commission income
and generate cross-selling potential.
We focus on M&A consulting (acquisition and sale,
raising of private equity and venture capital) and support capital market transactions ( IPO/SPO, stock option
programmes, delisting, corporate /government bonds).
Advice on strategic and business policy issues rounds
off our offer. The main target group of the newly established company will be the medium-sized companies
served by LB Kiel. In addition, the savings banks will be
able to use LB Kiel Corporate Finance GmbH as a
competence centre helping them to improve their
customer service. And last but not least, the new
company will be a natural partner for the privatization
of municipal companies.
In line with LB Kiel’s sectoral focus, the company’s
13 employees (as at the beginning of 2002) concentrate
on the energy, transport /logistics, real estate and health
care sectors. The company intends to increase its workforce to up to 35 professionals by the end of 2004.
Strategic Missions
In combination with our sister companies, Gudme
Raaschou in Denmark and Sweden as well as PCA
Corporate Finance Oy in Finland and the Baltic states,
our clients now benefit from a region-wide corporate
finance network with special expertise in cross-border
transactions. We have thus added a new dimension to
LB Kiel’s mission as the “Bank for the North”.
Private Banking Burdened by a Dull Market
The Private Banking unit developed heterogeneously.
Sales in the securities sector declined sharply. Private
investors’ reluctance to invest in equities made itself
particularly felt in the Asset Consulting unit. The Asset
Management unit, in contrast, delivered a good performance. We achieved another gratifying increase in the
number of private banking clients even though it fell
slightly short of our ambitious expectations. In contrast
to our securities business, especially the lending business, but also the deposit-taking business reported an
increase in new business and business volumes.
with us and use our broad range of high- quality products and consulting services, especially in commercial
and municipal underwriting business, commercial international business and securities business. In the year
under review, LB Kiel continued to expand its range of
joint back-office activities with savings banks.
In view of the economic slowdown, the lending
business of the savings banks in Schleswig-Holstein
grew less dynamically than in the previous year.
In 2001, their claims on customers increased by only
2,7 % to € 26.2 billion. Against this background and due
to intensified competition, LB Kiel’s new refinancing
business with savings banks declined by 18 % to € 0.9
(2000: 1.1) billion. At year-end 2001, total claims stood
at € 9.1 (2000: 9.4) billion. Due to the expected economic recovery, we expect the savings banks’ demand for
refinancing funds to increase again in 2002.
Refinancing Business with Savings Banks
Even though Refinancing Business with the Savings
Banks in Schleswig-Holstein Declined in the Year
under Review …
As central clearing bank for the savings banks, LB Kiel
provides refinancing funds and liquidity to the savings
banks and offers them a broad range of investment
vehicles from short-term time deposit investments to
portfolio management. We furthermore support the
savings banks with a broad spectrum of innovative
financial products and services such as asset/liability
management and balance sheet structure advice. For
their customer business, the savings banks co-operate
10
9
8
7
6
5
4
3
2
1
0
1997
1998
1999
2000
2001
41
42
Strategic Missions
… We Will Intensify Our Co-operation by a
Concentration of Resources
Our “Concentration of resources” programme will
result in a further intensification of our co-operation
with the savings banks. The introduction of new products will be accelerated and our sales activities will
become even more customer-oriented. Especially the
quality of our joint lending business with the savings
banks and their customers will benefit from the expanded product range of our newly established Corporates
unit. Moreover, LB Kiel has transferred its responsibility
for the transmission of federal promotion funds to
Investitionsbank as per January 1, 2002. This will strengthen Investitionsbank’s position as an administrator of
private-sector promotion programmes.
LBS: Slight Increase in New Business
Landes-Bausparkasse (LBS) is an economically independent, but legally dependent central division of LB Kiel
and the only unit of the Bank operating in the retail
sector. In the year under review, new business amounted to € 0.7 (2000: 0.7) billion. At 70.1 % (2000: 69.1 %),
new business arranged by the savings banks in SchleswigHolstein continued to make the strongest contribution
to LBS’ sales. In the year under review, LBS granted
loans under savings and loan agreements, pre- and
bridging financing as well as other building loans totalling € 319.1 (2000: 324.2) million. The total loan portfolio rose to € 1.4 (2000: 1.2) billion and total assets
increased to € 1.7 (2000: 1.5) billion.
While the situation in the residential real estate
market remained difficult, price losses on the stock
exchanges strengthened lower-risk investments and had
a positive effect on the savings and loan market.
LBS expects to consolidate its leading position in the
Schleswig-Holstein savings and loan market and maintain its business volume at the current level.
Restrained State and Municipal Lending Business
In our capacity as state and municipal bank, we advise
the State of Schleswig-Holstein and municipalities on
financing matters and extend loans to state and local
governments. The market for state and municipal loans
cooled noticeably in 2001. New business volume and
total claims declined to € 0.4 (2000: 0.8) billion and
€ 9.2 (2000: 10.6) billion, respectively. The decline in
new business volume was attributable to weak demand
in the first half of the year, with the market starting to
recover only in the last quarter.
State and Municipal Loans
11
10
9
8
7
6
5
4
3
2
1
0
1997
1998
1999
2000
2001
Strategic Missions
In co-operation with the European Investment Bank
(EIB), Luxembourg, we finance public projects in the
environmental, infrastructure as well as educational and
health care sectors. In the year under review, we concluded loan agreements for € 150 million with the EIB.
As of 2002, we will also finance projects promoting the
use of alternative energy sources.
We will continue to intensify our business relationships with public-sector clients going forward. In addition to classical municipal loans, we will focus on project and structured finance products as well as consulting services for the privatization of public companies in
co-operation with our newly established Corporate
Finance GmbH.
energy, municipal promotion as well as urban and
agricultural development.
In 2001, the promotion volume amounted to € 557
(2000: 505) million. Total assets increased slightly to
€ 5.74 (2000: 5.67) billion.
In addition to classical loan-oriented promotion
programmes, service offerings have gained increasingly
in importance. Investitionsbank offers project management services which support the state and municipalities in solving complex issues. IB’s consulting services
range from promotion guides and an advisory office for
business start-ups to municipal energy consultants and
a Euro Info Centre as well as 13 consulting centres and
offices throughout Schleswig-Holstein offering advice on
residential construction and private-sector promotion
programmes. In addition, Investitionsbank increasingly
prepared itself for the growing importance of regional
EU activities. Investitionsbank meanwhile offers a broad
range of EU consulting, support and financial services in
the Baltic Sea region.
Investitionsbank Schleswig-Holstein
Offers Complex Services
As an economically and organizationally independent,
but legally dependent central division of LB Kiel, Investitionsbank is the key administrator of the state’s promotion and structural policy programmes for the private
sector, residential construction, the environment and
*)
LB Kiel including IB and LBS, Sydbank AS, other savings
and loan associations = indicator for LB Kiel’s market
share (Sydbank and savings and loan associations are of
negligible importance).
* *)
All loans granted by banks domiciled in Schleswig-Holstein
or branches of other banks located in Schleswig-Holstein
to both national and international borrowers were recorded.The lending volume therefore exceeds the volume of
loans granted to borrowers domiciled in Schleswig-Holstein.
For LB Kiel: These statistics do not include loans extended
by the Rostock and Schwerin branches as well as by the
LB Kiel Copenhagen Branch (LBC).The share shown here
is therefore smaller than the actual share.
Market Shares of Financial Institutions in
Schleswig-Holstein * * )
Loans to non -banks
Other banks * )
36.3 %
Savings banks
26.4 %
Credit
cooperatives
7.9 %
Private banks
13.5 %
As at: 30 / 09 / 2001
Mortgage banks
15.9 %
Source: Central Bank of the Free and Hanseatic City of
Hamburg, the State of Mecklenburg-Western Pomerania
and the State of Schleswig-Holstein.
43
Strategic Missions
LB Kiel one of the Leading Foreign Banks in the
Baltic Sea Region
With a total Baltic Sea region exposure of some € 13.2
billion at the end of 2001, LB Kiel is one of the leading
foreign banks in the Baltic Sea region. We have a presence in all four Nordic capitals as well as in Tallinn, the
capital of Estonia, and we are continuously expanding
our activities in this region. We want to be the preferred second bank of our Nordic clients. Next to our
traditional lending business with ship owners and banks
where we have several decades of experience, we
meanwhile focus on syndicated lending, real estate
finance, structured finance, capital market activities and
increasingly corporate finance.
The Baltic Sea Region as a Growth Market
Next to the ongoing transformation of the eastern
Baltic nations, continued integration is the main growth
drivers for the Baltic Sea region. We expect Poland and
the Baltic states to be among the next countries to join
the EU. EU membership alone is expected to generate
additional annual growth of up to 2 % in the new member states and 0.7 % in the old EU countries going
forward. Assuming that Sweden and Denmark join the
Euro by 2005, as forecast by us, the Nordic countries
are likely to benefit from further trade integration and,
in particular, capital market integration. In view of the
technological competitiveness of the Nordic economies,
we expect the long-term growth trend to remain
unaffected by the noticeable economic slowdown in the
year under review.
Market Position of LB Kiel
in the Baltic Sea Region
12 %
9
6
3
a
ua
ni
ia
tv
La
th
Li
a
to
ni
d
Es
an
nl
Fi
ay
w
or
ed
en
N
D
en
m
ar
k
0
Sw
REGIONAL FOCUS ON THE
B A LT I C S E A R E G I O N
Source: LB Kiel, Deutsche Bundesbank
*
Share of LB Kiel in the total exposure of German banks to Scandinavian
and Baltic countries (loans subject to reporting requirements of ¤ 1.5 million
or more).
45
46
Strategic Missions
LB Kiel Copenhagen Branch (LBC):
The Hub for our Nordic Business
LB Kiel’s business activities in the Nordic countries are
controlled by the LB Kiel Copenhagen Branch (LBC). In
Denmark, LBC has meanwhile become one of the four
biggest banks (in terms of business volume).
LBC’s key activities include syndicated loans, real
estate finance and structured finance. Refinance activities
with small and medium-sized financial institutions in all
Scandinavian countries also play an important role.
These business relationships benefit from the fact that
LB Kiel does not compete with these banks in the retail
sector.
Business Volume Increased to ¤ 11.2 billion
2001 was another very successful year for LBC. All business segments reported increases. LBC’s total business
volume (balance sheet total plus contingent liabilities
and irrevocable loan commitments) rose by 25 % to
€ 11.2 (2000 : 8.9) billion and the margins improved.
Capital market activities benefited above all from falling
interest rates and the favourable development in the
bond market. We expect this positive development to
continue in 2002. A growing number of core clients
appreciates LBC’s flexibility as a partner for customized
financing solutions. This enables us to expand our crossselling activities and place our overall client relationships on a broader basis.
Gudme Raaschou: Corporate Finance in Denmark
and Sweden
Our Danish investment banking subsidiary, Gudme
Raaschou, focuses on the corporate finance, debt capital
markets, equities and asset management sectors. It is
part of LB Kiel’s corporate finance network and acts in
close cooperation with the Finance units of LBC.
Together with the Finnish PCA Corporate Finance Oy
and LB Kiel Corporate Finance GmbH (LB Kiel CF),
Gudme Raaschou installed a network of local corporate
Business Volume of LBC
in € billion
12
11
10
9
8
7
6
5
4
3
2
1
0
1997
1998
1999
2000
2001
finance units in the Baltic Sea region: PCA covers
Finland and the Baltic nations, LB Kiel CF covers
Germany, and Gudme Raaschou focuses on Denmark
and Sweden.
In the asset management sector, Gudme Raaschou
expanded its international connections as well as its
product range by cooperating with West AM, a business
unit of West LB. This enabled us to integrate our asset
management activities into a powerful international
network. The Gudme Raaschou Invest Health Care
fund, launched in 1997, received several awards in 2001.
However, Gudme Raaschou’s business development in
2001 fell short of our expectations, in particular due to
weakness on the stock exchanges.
Strategic Missions
Position in Finland Expanded:
LB Kiel Helsinki Branch
In 2001, we expanded our activities in Finland. LB Kiel’s
representative office in Helsinki was upgraded to branch
status in September 2001. The Helsinki Branch will
focus on new business acquisition, while the Copenhagen Branch will remain in charge of all back-office
activities in order to ensure efficient operations. As per
year-end 2001, Finland accounted for some € 1.6 billion
of LB Kiel’s foreign exposure. LB Kiel wants to become
one of the leading foreign banks in Finland by 2005,
targeting the top 200 companies in the country. In
addition, we want to attain a leading position in the
financing of public projects and infrastructure projects.
finance network, PCA provides advice on mergers and
acquisitions as well as private placements and the
structuring on finance solutions. Its product range
hence complements the financing products offered by
the LB Kiel Helsinki Branch. In a weaker economic
environment, which had a significant impact on the
investment banking sector, PCA’s business posted a
positive result outperforming the market average.
Market Position in the Baltic States Consolidated
Majority Stake in PCA Corporate Finance Oy
As per January 1, 2002, LB Kiel increased its share in
PCA Corporate Finance Oy to 71 %. The Finnish financial services provider offers its clients a broad spectrum
of consulting services on structured finance, debt finance and project finance. As part of LB Kiel’s corporate
Foreign Exposure Baltic Sea Region
Norway € 2,573 million 19.6 %
Finland € 1,636 million 12.4 %
Russia € 82 million 0.6 %
Poland € 283 million 2.2 %
Island € 189 million 1.4 %
Baltic states € 154 million 1.2 %
Denmark
€ 4,560 million
In addition to its activities in the Nordic countries, PCA
also acts as a second bridgehead to the Baltic states
where we see considerable business potential. LB Kiel
has been present in these markets through its representative office in Tallinn since 1995.
In the year under review, LB Kiel consolidated its
market position as a provider of finance for local companies and banks. In the corporate sector, we focus on
companies which meet LB Kiel’s strict credit standards.
These companies mainly operate in the energy, utilities
and telecommunications sectors. Project finance – often
with Scandinavian blue chips as project
sponsors – is another rapidly growing
market segment. Thanks to its presence in
all Nordic countries as well as its representative office in Tallinn, LB Kiel is ideally
positioned to structure and accompany such
34.7 %
financings.
PCA often works hand in hand with the
representative office in Tallinn for finance
and investment projects. This enables us to
offer our Baltic clients customized solutions
from a single source.
Sweden € 3,680 million 28.0 %
as at 31/12 /2001
Total € 13,158 million
47
Strategic Missions
International
Product and Sector Specialist
As a product and sector specialist, LB Kiel concentrates on transport,
ship and real estate finance, leasing refinance and, increasingly, on the
utilities sector. Syndicated loans are also gaining in importance. In
spite of the weaker economic environment and a clear focus on a
well-balanced risk structure, new business increased significantly.
STRUCTURED FINANCE
Strong Growth in a Difficult Environment
At € 2.4 billion, new business in the Structured Finance
unit, which includes the transport finance and leasing
refinance activities, clearly exceeded the previous year’s
level of € 1.9 billion. Accordingly, total claims rose to
€ 5.3 (2000: 4.1) billion.
Structured Finance
5.5
5.0
4.5
4.0
3.5
3.0
2.5
support from a single source. In 2001, we successfully
continued the favourable development of past years
even though the tragic events on September 11 had a
strong impact on our new business especially in the
aircraft finance sector. Thanks to its well-balanced risk
structure, we were nevertheless able to place a significant part of our aircraft portfolio on the market using a
successful ABS structure (asset backed security) shortly
before the end of the year.
All in all, our targets in the railway, logistics and
infrastructure sectors were more than met, which
helped to narrowly reach the aggregate new business
target for the transport sector. The successful completion of our role as the consultant and arranger of the
financing for Lübeck’s “Herrentunnel” project has
meanwhile won us additional mandates in the area of
privately financed road construction projects.
Due to our moderate risk policy as well as our
successful diversification efforts, we continue on the
right path. We see the cyclical market environment as a
challenge, but also as an opportunity for LB Kiel.
2.0
Leasing Refinance: Continued Growth Especially
Internationally
1.5
1.0
0.5
0
1997
1998
1999
2000
2001
Transport Finance: Railway, Logistics, Infrastructure
Sectors Compensate Headwind in the Aircraft
Sector
By focusing on the aircraft, railway, logistics and infrastructure sectors, our Transport Finance core unit
offers international companies around the world full
The Leasing Refinancing unit also posted considerable
increases. The positive development was primarily
attributable to the fact that our real estate leasing
activities and our international activities clearly exceeded our expectations. We are already one of the leading
providers of leasing refinance in Germany. In order to
consolidate our position, we are gradually expanding
our international activities. Building on our experience,
we want to increasingly support our clients with innovative financing solutions.
49
Strategic Missions
Consistent Business Policy
SHIP FINANCE
Positive Trend Continued
In 2001, the Ship Finance unit continued the positive
trend of past years. At € 2.1 billion, new business
clearly exceeded the previous year’s level (€ 1.4 billion). Total claims rose by 19 % to € 4.3 (2000: 3.6)
billion.
We generally concentrate on counterparties with longterm shipping needs and sufficient cash flow to repay
the loans. In addition to companies with long-term
charter agreements, we therefore focus on industrial
shippers. We maintain close contacts to the shipping
companies financed by us in order to meet their individual needs.
Highly Diversified Portfolio of Ship Loans
In the past years, LB Kiel has built up a high-quality
portfolio of ship loans with a well-balanced risk structure. At year-end 2001, our portfolio included 147 shipping companies. Our highly diversified loan portfolio
covers a broad range of market segments, which is an
advantage given the often different cyclical development
of the individual segments.
Ship Finance
4.5
4.0
3.5
3.0
2.5
Broad Diversification by Market Segments
2.0
Portfolio in € million
1.5
800
1.0
700
0.5
600
17.0 %
16.0 %
12.9 %
0
1997
1998
1999
2000
2001
500
11.6 %
10.7 %
9.5 %
400
8.3%
300
5.9 %
200
3.7 %
100
2.0 %
1.3 %
1.1 %
0
C
on
Bu tain
lk er
C
ru
ca sh
ise
rg ip
s
R o ship C O o s h
h
il
s
i
ll
e
a
m ta ps
on n
d
n
i
c
/r
o l pas a l ke r
s
l - o se t a
f f ng n ke
a n er
r
d
fe s
c a rr
ie
r
fe s
M
r
ul
O rie
tipu G ffsh s
In
rp as
te
o
ri
o s t a re
m
nk
e
co
fr
ei ers
ns
tr Re ght
uc ef
e
tio er rs
s
n
fin hip
an s
ci
O ng
th
er
s
As in the previous year, the further increase in the
loan portfolio was attributable to the intensification of
existing client relationships as well as to the continuous
expansion of our client base. Underwriting business was
dominated by club deals with a small number of syndicate members. In addition, LB Kiel again arranged or
co- arranged several large syndicated loans as an underwriter or co- underwriter.
51
52
Strategic Missions
A breakdown by major shipping regions also shows
that our portfolio of ship loans is well-balanced.
Regionally balanced Loan Por tfolio
Breakdown by borrowers’ domiciles
Germany
19 %
Scandinavia
24 %
Others
10 %
Greece
15 %
North America
13 %
Other EU countries
6%
Far East
13 %
Position as a Leading International Provider of
Ship Finance Consolidated
During a weakness in the shipping markets, we benefit
in particular from our diversified loan portfolio and our
general focus on industrial shippers and shipping companies with a good standing. A general increase in margins and a return -oriented intensification of our client
relationships enabled us to further improve on the
previous year’s good result.
The conditions for a continued favourable business
development in 2002 are good. On the one hand, our
portfolio of commitments already stood at € 1.1 billion
on December 31, 2001. On the other hand, we see also
in 2002 good opportunities to make additional products
available to our existing clients.
Strategic Missions
R E A L E S TAT E B A N K I N G
Return-oriented Growth …
In fiscal 2001, the Real Estate Banking unit clearly increased its new business volume to € 1.8 (2000: 1.6)
billion, which represents an increase of 17 %. Foreign
business again made a major contribution, accounting
for € 0.7 (2000: 0.6) billion (+22 %) or 40 % of total
new business. Total claims grew by 18 % to € 9.2
(2000: 7.8) billion as a result of our continued market
activities based on strict return targets. € 1.2 billion or
13 % thereof were accounted for by foreign loans and
another € 0.4 billion by foreign currency loans. Some
62 % of our total claims are residential property loans.
About 98 % of our portfolio is secured by mortgages,
while senior mortgages (up to a maximum of 60 % of
the collateral value) account for approx. 71 % of our
total claims.
In 2001, we pushed ahead the transformation from a
pure lender to an innovative partner offering a broad
range of real estate services. In addition to a strong
increase in volumes, our attractive international business and our clear cross-selling strategy enabled us to
achieve an above -average increase in earnings in a
difficult overall market environment. At the same time,
LB Kiel continued its risk-aware portfolio management
strategy.
…and Continued Strong Foreign Business
The International Real Estate Finance unit has developed dynamically since 1999. Some 90 % of our – with
respect to the risk and return structure well balanced –
international business was generated in the USA where
we focused on class A office properties in central locations in the so-called 24-hour cities. In addition to the
USA, we invested in British and Canadian properties.
Split German Market
The German real estate market remained split; while
lettability was the key criterion for project sponsors in
the new federal states where vacancy rates remained
high, in particular rents for commercial properties in
attractive locations stabilized at a high level in western
Germany thanks to low vacancy rates. The new federal
states account for just under one third of our real
estate finance portfolio. In line with our business policy,
our exposure concentrates on Mecklenburg -Western
Pomerania. Not least thanks to our cautious lending
policy, we see no particular risks here in spite of the
tense market environment.
Real Estate Finance
10
9
8
7
6
5
4
3
2
1
0
1997
1998
1999
2000
2001
53
Strategic Missions
The gratifying business development in the western
and southern German conurbations made a key contribution to our 2001 result. In this region, we supported
several interesting major projects. We stepped up our
sales activities and intensified our business relationships
with investors. This formed the basis for a significant
increase in return-oriented selected new business with
syndicate partners. Our activities in the stabilizing
Berlin real estate market as well as our long-term
business relationships to our customers in SchleswigHolstein also contributed to the favourable business
development in the Real Estate Banking unit.
Prime Properties Remain a Safe Haven
In the international market, we will continue to focus
on selective return-oriented syndicate business with
renowned partners and expand our position as an
arranger or co-arranger of transactions. Next to North
America, we want to focus increasingly on interesting
real estate markets in France and Great Britain as well
as central /eastern European countries (Poland, Hungary,
Czech Republic).
In view of the stable market in the western conurbations, the German real estate industry had a slightly
optimistic start into 2002. However, it should not be
overlooked that some areas of the real estate sector
are affected by the weak economy. Especially the downturn in the so-called new economy has had an impact
on the real estate market. Prime locations and properties let to tenants of good credit standing under longterm agreements are in high demand. The location
remains the key criterion for the approval of loan
applications. The past fiscal year has shown once more
that classical investments in real estate remain a safe
haven in uncertain times.
Early Identification of Trends
When it comes to realizing our ambitious targets, we
will continue to pay special attention to a good balance
between risk awareness and return orientation. The
early identification of real estate trends as well as the
implementation of a corresponding risk policy are key
success factors. In this context, especially the farreaching changes resulting from Basle II must also be
taken into account. We are currently developing new
concepts and management systems which will enable us
to meet the requirements of our customers and of the
supervisory authorities early on.
55
Strategic Missions
FINANCIAL INSTITUTIONS /
I N T E R N AT I O N A L F I N A N C E
Excellent Increase in New Business with a Strict
Focus on Good Credit Standing
The Financial Institutions/International Finance unit
almost doubled its new business to € 4.1 (2000: 2.4)
billion. As a result, total claims climbed 42 % to € 9.2
(2000: 6.4) billion, meaning that the unit again made a
substantial contribution to the future cash flow generated by the Bank.
Financial Institutions/International Finance
10
9
8
7
Latin American markets, the Middle East and increasingly
on Russia with a clear focus on long -term structured
trade finance products with attractive risk-return
structures.
Strategic Focus on Syndicated Loans and
High-margin Structured Business
Going forward, we intend to increase our net commission
income from syndicated loans even further. In 2001, we
laid the foundations for this by acting as a mandated
arranger in ten syndicated loans to banks totalling € 600
million. In addition, we played a leading role in many other
transactions in the banking and corporate sector. We will
continue to improve our syndicated loan business and plan
to pool LB Kiel’s existing activities in this area as well as
establish a presence in London. In order to further improve our profitability, we will target an appropriate number of high-margin structured transactions which are in
line with our conservative risk approach. Complex trade
finance, leveraged finance as well as structured notes are
expected to offer good opportunities.
6
Cautious Projections for 2002 as Risk Situation
Remains Tense
5
4
3
2
1
0
1997
1998
1999
2000
2001
The average term of the loans increased, while the
average margin declined. With respect to the difficult
situation of the world economy this was largely attributable to the strict focus on a good credit standing in
case of loans to banks, insurance companies and states
which accounted for 70 % (2000: 60 %) of new business.
In geographical terms, we therefore concentrated on
EU countries as well as central European EU candidates. Due to their quality, these borrowers generally
obtain long-term loans at moderate margins. International corporate lending accounted for some 20 % of
new business. The strategic focus on the utilities
industry initiated last year was pushed ahead. The
geographical focus was on Europe and North America.
Trade and export finance contributed some 10 % to
the new business volume, concentrating on emerging
The slowdown in the world economy showing signs of
recession as well as the tragic events on September 11
have led to the downgrading of many ratings. We have
initiated countermeasures in good time. At the end of
2000, we already started to reduce our exposure in
Argentina. However, the collapse of ENRON also caught
us off guard. In view of our moderate exposure which
mainly consists of project finance, the impact was,
however, limited. There are still no signs for a noticeable recovery of the risk situation in 2002, even though
the economy should meanwhile have bottomed out. In
spite of certain positive signs, it is still hard to say when
we will see a sustained recovery of the world economy.
We will therefore stick to our conservative risk management policy. Against this background, we do not
expect to reach the dynamic new business growth rates
of past years. We will focus on quality and continue the
successful business development of past years by stepping up our targeted sales activities.
57
Strategic Missions
Partner in the
International Capital Markets
LB Kiel’s capital market activities are pooled in the Capital Markets
and Asset Liability Management units. Both units achieved good
results in the difficult capital market environment prevailing in 2001.
Reorganization of the Capital Markets (CM) and
Asset Liability Management (ALM) Units
The activities of the Fixed Income, Equity Trading,
Equity Sales and FX Money Market units have been
pooled in the Capital Markets unit in order to achieve
a uniform market presence.
The newly established Asset Liability Management
unit concentrates on the management of essential
financial resources (liquidity, equity and debt capital as
well as risk /return positioning of LB Kiel) and the
balance sheet structure, co-operating closely with the
staff and market units as well as with the central committees. This means that ALM is the portfolio manager
of LB Kiel. In order to achieve its goals, ALM also acts
as a portfolio investor (taking long-term risks on the
debt capital markets) and disinvestor. The realization of
these tasks is pushed ahead by the sub-units Treasury,
Asset Allocation, Securitization, Portfolio Investment,
Financial Engineering /Conduits and Business Development units.
Interest Rates in 2001:
Strong Decline at the Short End
10 Y Bunds
3M Euribor
in %
5
4
3
1/2000
1/2001
1/2 002
Shares in 2001: Downswing Continued
S&P 500
DAX
8000
1800
7000
1600
6000
1400
5000
1200
4000
1000
Capital Market Environment and Overall Result
The high level of uncertainty in the capital market led
to continued high volatility in the bond and stock
markets. The slowdown of the world economy, the
tragic events of September 11 as well as the collapse of
ENRON had a strong impact on the markets. The central banks responded with massive key rate cuts to the
resulting fears of recession especially in the USA.
Unexpectedly strong cuts were made by the Fed which
reduced its key rate by a total of 4.75 percentage
points in eleven steps. Investors lost confidence in the
stock markets; as a result of the events in New York,
the DAX slumped temporarily to 3,787 points. Although
share prices recovered in the fourth quarter, the DAX
fell by almost 20 % over the course of the year.
800
3000
1/2000
1/2001
1/2002
59
60
Strategic Missions
This development of the markets is directly reflected in
LB Kiel’s business results. The fixed income units positioned themselves in line with the interest rate cuts and
further improved on their previous year’s result. Net
commission income declined slightly compared to the
very high level achieved last year. Strict risk management also helped to limit stock losses. The reorganization hence started to bear fruit in the year under
review.
Significant Increase in Net Income from Trading
Overall, the Capital Markets unit generated a very good
gross operating result for the Bank in the year under
review. In a difficult market environment, net trading
income surged to € 36 (2000: 16.0) million. The slight
losses incurred in Equity Trading were more than offset
by the strong increase in the FX Money Market and
Fixed Income units.
First synergy effects resulted from the integration of
the FX Money Market unit. The well-positioned Short
Term Desk followed the massive key rate cuts by the
Fed by a total of 475 basis points and made a major
contribution to the good result. The Derivatives and
Sales team clearly exceeded the previous year’s result
thanks to intensive cross-selling of products adapted to
the specific needs of their customers.
An equally good result was achieved by the Fixed
Income unit, with the good trading result being attributable to the consistent implementation of bond and
derivatives trading strategies. The expansion of the sales
unit and the resulting acquisition of new clients led to a
81 % increase in sales with corresponding contribution
margins.
The Equity Trading unit suffered from the negative
sentiment prevailing in the stock markets. A slight
recovery in early 2001 was used to reduce equity
positions built up in 2000. Due to the high level of
uncertainty, own trading was largely restricted to
spread positions.
Moderate Decline in Commission Income from
Securities Business
Compared to the massive setback on the stock exchanges in 2001, commission income from the sale of equities
and derivatives declined only moderately to 82 % of the
record level achieved in 2000. While special and retail
funds business declined, net commission income in the
stock sales segment increased on the previous year,
benefiting from the recruitment of additional institutional clients. As many fund investors took a pro-cyclical
approach and invested in defensive funds in 2001, large
equity positions were switched into bond positions.
Treasury Unit Responsible for the Central
Management of Banking Risks
The Treasury unit was completely repositioned in 2001.
It is now responsible for the central management of
Bank-wide interest rate and liquidity risks and is the
first point of contact for all refinancing issues. Interest
rate risks and liquidity risks are managed separately
because that way risks can be managed more efficiently
and market movements can be better exploited. In
addition, the Treasury unit pro-actively offers its services to the Bank’s lending units. It creates transparency
for refinancing activities and provides stimulus by
passing on market changes. The 2001 results of the
Treasury unit, which are reflected in the Bank’s net
interest income, clearly exceeded our expectations.
Good Standing as a National and International
Issuer Strengthened
The placement of own securities and borrowers’ note
loans are our most important source of refinancing.
In spite of the public debate about the future of the
German Landesbanks, we continued to improve our
good standing as a national and international issuer,
reflected in the volume placed with final investors.
Strategic Missions
In addition to traditional own issues, LB Kiel refinances its activities through silent participations qualifying
as core capital, profit sharing rights and subordinated
debt placed with German savings banks and other
institutional investors. Medium-term and long-term
securities in foreign currencies were issued under a
Global Medium Term Note (GMTN) programme, which
succeeded the Euro Medium Term Note (EMTN) programme in the year under review. In fiscal 2001, 51
EMTN/GMTN issues were placed on the international
markets raising a total of € 11.5 billion. Subordinated
instruments accounted for € 215 million thereof. In
addition, LB Kiel uses a Euro Commercial Paper (ECP)
and a US Commercial Paper (USCP) programme. The
total gross volume of securities and borrowers’ note
loans issued in 2001 increased to € 15.9 (2000: 13.6)
billion. At year-end 2001, own securities and borrowers’
note loans outstanding stood at approx. € 44.1 (2000:
42.6) billion.
In early 2002, we raised € 500 million qualifying as
core capital from international investors using an innovative product.
Strong Increase in Portfolio Investments
Complex structured finance products such as asset
backed securities (ABS) and credit derivatives are
increasingly gaining in importance both for our assets
and our liabilities side.
The events in 2001 affected our interest-bearing new
business. While credit spreads had already widened in
the first half of the year due to the slowdown of the
world economy, this trend was accelerated by the tragic
events on September 11 and the collapse of ENRON.
We therefore continued to focus on ABS tranches with
good ratings. New ABS business rose to € 2.6 (2000:
0.6) billion and the portfolio stood at € 3.7 (2000: 1.1)
billion at year-end. In order to push ahead our ABS
activities, we increased our ABS research team. Total
new surrogate loan business (excluding ABS) also rose
considerably to € 2.1 (2000: 0.7) billion and the portfolio (entire Bank excluding LBC) grew to € 7.0 (2000:
5.7) billion. A major contribution was made by credit
default swaps which do not increase the Bank’s liquidity
requirements.
We continued to increase our securitization expertise. In the fourth quarter of 2001, i. e . after the terrorist attacks in New York, we securitized and placed a
significant part of our aircraft portfolio totalling over
€ 1 billion on the market.
Outlook for Fiscal 2002
We will continue to push ahead our targeted sales
activities and expand our structuring expertise in order
to further strengthen our good standing as a national
and international issuer. Flow income and net commission income will benefit from the central management
of short-term market risks by the Capital Market units.
We will complement our good team by further investments in risk management systems and highly qualified
staff.
The optimization of the processes for the central
management of our financial resources and balance
sheet structure will continue to be a main task of the
Asset Liability Management unit. Especially the active
management of the Bank’s portfolios offers considerable potential without increasing the risks. In future,
large parts of the Bank’s balance sheet will be actively
managed using a new (loan) portfolio management
system. Collateral and netting agreements as well as a
growing number of securitization programmes will
optimize the Bank’s liquidity position. On the funding
side, we will continue to expand our international
investor base and consolidate our good credit standing
and acceptance on the capital markets.
We will continue to underpin our first mover advantage through innovative products and a clear focus on
our core competencies. We will further develop our
strong team and prepare it for our ambitious targets.
LB Kiel’s presence in New York, the most important
financial centre of the world, planned for 2002 will be
another milestone in the targeted expansion of our
capital market activities enabling us to leverage our
core competencies.
61
62
Strategic Missions
Landesbank Schleswig-Holstein
International S. A. (LI)
LB Kiel’s Luxembourg subsidiary focuses on euro loans, money
market, foreign exchange and securities activities as well as private
clients. LI used the continued positive earnings trend to further
strengthen its equity capital base.
Total Assets Declined Due to Lower Claims on Banks
LI closed fiscal 2001 with total assets of € 7.3 (2000:
7.7) billion, which was primarily attributable to a decline
in claims on banks by € 0.5 billion to € 2.6 billion.
At € 1.4 billion, claims on customers remained largely
unchanged on the previous year. The securities portfolio
increased to € 3.1 billion, exceeding the previous year’s
high level by approx. € 100 million. We refinanced our
activities through bank deposits in the amount of € 6.2
(2000: 6.6) billion and customer deposits in the unchanged amount of € 0.5 billion. Our disclosed liable capital
after allocation to reserves according to the proposed
appropriation of profit stood at € 200.1 (180.1) million.
The business volume including contingent liabilities and
loan commitments declined by € 0.6 billion to € 7.4
billion.
Low Money Market and Lending Business Volumes
Interbank money trading is used for liquidity settlement
purposes as well as for the global management of
interest rate risks. In addition to balance sheet positions, we also use innovative financial instruments.
On-balance sheet money trading again declined by
approx. € 100 million to € 195 million. Medium-term
and long-term claims declined by 8 % to approx. € 4
billion. In order to ensure the quality of our lending
portfolio, we focus on borrowers based in OECD
countries. Borrowers domiciled in EU countries and
other western industrialized countries account for
about 88 % of the lending volume, which mainly consists
of loans to states, state banks and financial institutions
or loans guaranteed by them.
Securities Business with a Focus on Fixed-income
Papers
Fixed-income papers account for the bulk of our securities portfolio. Shares and other non-fixed income
securities play a minor role. The securities portfolio
almost exclusively consists of listed securities, most of
which can be converted into cash at short notice. The
entire securities portfolio was valued strictly according
to the lower of cost or market principle.
Private Client Business Developed Satisfactorily
The Bank offers a comprehensive range of services for
private clients including asset management and securities-related services as well as Lombard loans. Nobis
Bank, in which LI holds an 80 % share, also focuses on
the private banking and asset management sectors. In
2001, our private client business was characterized by
the difficult situation on the capital markets. Against this
background, our private client business generated a
satisfactory result.
Institutional Client Business Expanded
In 2001, we acquired a 51.62 % share in International
Fund Services & Asset Management S. A. (IFSAM). IFSAM
is a leading European provider of fund service platforms
for institutional investors. Due to its know-how as well
as its dealing, asset management, fund research and
issuing services, IFSAM acts as the investment fund
competence centre of the LB Kiel Group.
Positive Earnings Trend Continued
Earnings continued to develop favourably. Net interest
and commission income rose by € 6.6 million to € 48.1
million. Earnings from financial transactions declined to
€ - 2.8 (2000: 8.1) million, reflecting among other things
additional measures aimed at enhancing the Bank’s
internal strength.Value adjustments and provisions were
made to cover all discernible risks. Furthermore, LI
made global value adjustments permissible under
Luxembourg tax law. In addition to a dividend on the
silent participations of the parent company, the proposal
on the appropriation of profit provides for the allocation of € 20 million to free reserves.
Strategic Missions
Hamburgische Landesbank ( HLB )
In fiscal 2001, Hamburgische Landesbank again achieved
a respectable result with a clear increase in both volumes
and earnings.
Qualitative Expansion
Hamburgische Landesbank maintained its hold in a
rather unfriendly market environment which was
characterized by strong price fluctuations on the financial markets and a slowdown of the world economy.
Based on a strict focus on profitable activities as well as
close long-term customer relationships, HLB achieved a
qualitative expansion in line with its targets. Total assets
rose by 8.4 % to € 87.5 billion, the business volume
increased by 10.1 % to € 103.7 billion and the lending
volume was up 9.2 % to € 98.5 billion. Equity investments continued to gain in importance. At year-end
2001, equity investments based on the value of the
individual companies totaled € 946.1 million. This represents an increase of € 95.2 million or 11.2 % on the
previous fiscal year. The Bank’s portfolio comprised a
total of 127 equity investments. Equity investments are
primarily made to intensify the co-operation with
corporate clients and win new client business. At the
end of the year under review, the Bank’s subscribed
capital amounted to € 1,914.4 million. HLB’s equity
capital totalled 2,717.9 million. Liable capital according
to KWG – including supplementary capital – stood at
€ 5,114.5 million.
Strict Risk Provisioning Approach Retained
As in the previous year, risk provisions focused on
domestic credit risks. Risk provisions for foreign exposure were expanded, but burdened HLB only slightly.
In contrast, expenses from the valuation of the securities portfolio increased significantly. As before, adequate
provisions were made for all discernible and future
risks.
Earnings Continued to Improve
Net interest income again made the key contribution,
increasing by some 20 % to € 671 million. Thanks to the
gratifying development of other services, net commission income remained flat at the previous year’s high
level of € 93 million. Net income from financial transactions more than doubled to € 18 million, but still made
a rather small contribution. Given that administrative
expenses rose by only about 16 % to € 296 million, the
cost-income ratio declined to just under 35 %. The
operating profit before risk provisions and evaluation
climbed to € 552 million, up almost one third on the
previous year’s satisfactory result. Net risk provisions,
in contrast, almost doubled, reflecting the difficult
market environment. HLB increased creation of supplementary capital and generated additional core capital
by allocating € 20 million to the fund for general banking risks. Taxes on income more than halved. Net
income for the year after an unchanged partial profit
transfer of € 122 million – including the share of the
non-typical silent partner – rose by some 82 % to
€ 100 million, permitting an allocation to reserves from
retained earnings of € 66 million.
63
Annual Accounts for 2001
Annual Accounts
and Group Annual Accounts for 2001
66
Group Balance Sheet
70
72
Balance Sheet of LB Kiel
76
Statement of Income of LB Kiel
79
Notes to the Annual Accounts
and Group Annual Accounts
( incl. Segment Report and
Group Cash Flow Statement )
65
66
Group Balance Sheet as at December 31, 2001
€ thousands
Assets
prev. year
prev. year
1. Cash reserve
a) cash in hand
b) balances with central banks
thereof:
with Deutsche Bundesbank
8,594
227,404
6,457
129,362
( 191,476 )
106,385
135,819
2. Debt instruments issued by public institutions and bills of
exchange eligible for refinancing with central banks
a) treasury bills and discounted treasury notes as well as similar
debt instruments issued by public institutions
thereof:
refinancable at Deutsche Bundesbank
–
b) bills of exchange
thereof:
3,751
3. Loans and advances to banks
a) payable on demand
b) other loans and advances
thereof:
building loans of Landes-Bausparkasse (LBS)
4. Loans and advances to customers
thereof:
secured by mortgage
municipal loans
secured by ship mortgages
building loans of Landes-Bausparkasse
from allocations (building society loans)
for prefinance facilities and interim financing
other
thereof:
secured by mortgage
To be carried forward:
(–)
5,571
4,490
5,402
32,390,114
2,035,567
30,333,865
32,369,432
64,042,065
58,115,144
3,751
( 4,490 )
( 124 )
13,765,683
13,628,374
7,958,348
( 13,022,183 )
( 14,246,252 )
( 6,622,006 )
405,598
921,586
42,155
( 419,455 )
( 746,324 )
( 38,525 )
1,187,942
( 1,105,383 )
5. Bonds and other fixed-income securities
a) money market instruments
aa) issued by public issuers
thereof:
eligible for refinancing with Deutsche Bundesbank
ab) issued by other issuers
thereof:
b) bonds
ba) issued by public issuers
thereof:
bb) issued by others issuers
thereof:
c) own bonds
nominal amount
6. Shares and other non-fixed income securities
912
1,820
2,280,594
30,109,520
102
–
1,895,327
1,353,397
235,998
(–)
269,951
509,496
2,404,823
126,109
( 147,336 )
8,650,389
8,802,379
5,647,142
( 5,929,372 )
22,616,386
26,481,874
35,284,253
8,979,539
( 8,709,392 )
1,580,916
( 1,376,536 )
39,297,505
1,391,743
32,928,469
1,738,035
1,526,447
137,609,109
125,180,892
1,608,429
€ thousands
Liabilities
prev. year
prev. year
1. Liabilities to banks
b) with agreed maturities or at agreed notice periods
c) savings deposits of Landes-Bausparkasse (LBS)
thereof:
for allocated contracts
3,875,920
52,866,129
2,071
56,744,120
770
4,064,183
47,845,473
5,669
51,915,325
( 3,230 )
2. Liabilities to customers
a) savings deposits
aa) savings deposits with agreed notice of three months
ab) savings deposits with agreed notice of more than three months
ac) savings deposits of Landes-Bausparkasse
thereof:
on terminated contracts
( 5,348 )
6,219
on allocated contracts
( 17,557 )
15,158
77,172
5,226
792,002
82,205
4,271
831,172
917,648
b) other liabilities
ba) payable on demand
bb) with agreed maturities or at agreed notice periods
2,754,682
20,777,620
3,974,973
23,373,613
27,348,586
28,266,234
24,406,702
500,328
507,482
44,133,464
34,277,493
6,263,914
40,541,407
1,363,179
1,366,188
6. Other liabilities
684,014
741,984
7. Deferred income
384,447
400,449
453,581
251,689
149,129
132,236
533,054
923,106
954,824
17,194
35,366
2,011,937
1,757,676
135,481,604
123,160,457
3. Liabilities of Investitionsbank relating to federal
promotion programmes with agreed maturities
or agreed notice periods of four years or more
4. Certificated liabilities
a) bonds issued
b) other certificated liabilities
thereof:
money market instruments
5. Trust liabilities
thereof:
trust loans
8. Provisions
a) provisions for pensions and
similar obligations
b) tax provisions
c) other provisions
9. Interest equalization fund
10. Special reserve item
11. Subordinated debt
35,476,155
8,657,309
8,647,363 ( 6,263,914 )
1,228,617 ( 1,251,175 )
273,958
57,712
121,911
67
68
€ thousands
Assets
prev. year
prev. year
137,609,109
125,180,892
200,144
102,094
123,787
97,842
1,363,179
1,366,188
13,266
16,165
11. Tangible fixed assets
712,956
576,468
12. Other assets
757,866
502,867
13. Prepaid expenses
215,957
242,316
23,334
–
141,019,598
128,084,832
Carried forward:
7. Equity investments in non-affiliated companies
thereof:
in banks
in financial services institutions
8. Equity investments in affiliated companies
thereof:
in banks
9. Trust assets
thereof:
trust loans
10. Intangible fixed assets
14. Deferred taxes
Total assets
62,236
495
9,240
1,228,617
( 63,313 )
( 495 )
( 9,725 )
( 1,251,175 )
€ thousands
Liabilities
prev. year
prev. year
Carried forward:
12. Profit-sharing rights
thereof:
due in less than two years
51,129
123,160,457
1,112,684
1,122,993
143,289
109,550
( 76,438 )
13. Fund for general banking risks
14. Equity capital
a) subscribed capital
b) capital reserves
appropriated reserves of Investitionsbank
135,481,604
1,376,492
1,008,993
1,083,066
1,031,244
2,459,558
c) earnings reserves
ca) statutory reserves
cb) statutory reserves of Landes-Bausparkasse
cc) appropriated reserves of Investitionsbank
d) Group reserves
e) minority interests
f) Group net retained earnings
391,000
77,205
35,883
310,000
74,137
28,107
504,088
1,089,706
148,974
79,695
4,282,021
1,020,550
148,316
70,485
3,691,832
141,019,598
128,084,832
1. Contingent liabilities from guarantees
and indemnity agreements
7,080,622
4,182,890
2. Other commitments
a) placing and underwriting commitments
b) irrevocable lending commitments
–
8,352,769
602
7,679,176
Total liabilities
69
70
January 1 – December 31, 2001
€ thousands
1.
2.
Interest income from
a) lending and money market transactions
thereof:
interest income of Landes-Bausparkasse (LBS)
from LBS loans
from prefinance facilities and interim financing
from other building loans
b) debt securities and other fixed income securities
Interest expense
thereof:
on savings deposits of Landes-Bausparkasse
prev. year
prev. year
7,515,279
19,578
50,681
2,934
( 20,001)
( 39,087)
( 2,352 )
1,839,912
5.
6.
1,786,227
9,355,191
8,557,015
22,518
Commission income
thereof:
commission income of Landes-Bausparkasse
6,401
on contracts signed and arranged
from loans granted after allotment
2,486
of building saving contracts
from the allocation and administration of prefinance facilities
6
and interim financings
7.
Net income or expense from trading activities
8.
Other operating income
9.
Earnings from the liquidation
of special reserve items
10. General administrative expenses
a) personnel expenses
aa) wages and salaries
ab) social security contributions,
retirement pensions and other benefits
thereof:
for retirement pensions
b) other administrative expenses
11. Depreciation of and adjustments
to intangible and tangible fixed assets
7,978,057
650,183
98,064
86,258
6,927
5,432
98,617
1,790
2,276
70,953
13,504
13,607
Income from profit-and-loss pooling agreements, profit
transfer agreements and partial profit transfer agreements
Commission expense
thereof:
commissions on contracts signed and arranged
of Landes-Bausparkasse
798,176
( 22,027 )
3. Other income
a) shares and other non-fixed income securities
b) equity investments in non-affiliated companies
c) equity investments in affiliated companies
4.
6,842,013
190,616
197,036
( 6,281)
( 2,475 )
(6)
52,946
7,375
137,670
55,470
141,566
57,985
27,310
227,907
118,475
18,172
26,500
( 7,557 )
192,792
164,064
69,562
65,558
262,354
41,292
( 39,939 )
185,721
448,075
157,656
387,278
48,645
37,998
843,044
639,651
71
€ thousands
prev. year
prev. year
Carried forward:
843,044
639,651
12. Other operating expenses
120,755
131,156
13. Write-downs and value adjustments
on loans and certain securities and
additions to provisions for bad debt
278,365
146,294
14. Write-downs and value adjustments on equity investments in
non-affiliated companies, affiliated companies and securities
treated as fixed assets
12,559
13,517
15. Allocations to the fund for general banking risks
33,640
37,251
2,918
298
394,807
311,135
16. Expenses from loss transfers
17. Results from normal business operations
51,199
19. Other taxes not shown under other
operating expenses (item 12)
32,250
20. Profits transferred under partial profit
transfer agreements
thereof:
Landes-Bausparkasse
3,068
22. Retained earnings carried forward from the previous year
23. Allocation of net income to earnings reserves
a) statutory reserves of Landesbank
b) statutory reserves of Landes-Bausparkasse
c) appropriated reserves of Investitionsbank
d) profit attributable to shareholders outside the Group
24. Minority interests
25. Group net retained earnings
130,938
83,449
2,199
133,137
137,397
93,674
173,961
84,324
3,592
6,071
81,000
15,295
–
413
15,775
3,068
691
376
1,150
–
79,695
70,485
( 3,068 )
72
Balance Sheet of LB Kiel as at December 31, 2001
€ thousands
1. Cash reserve
a) cash in hand
b) balances with central banks
thereof:
with Deutsche Bundesbank
2. Bills of exchange eligible for
refinancing with central banks
thereof:
3. Loans and advances to banks
b) other loans and advances
thereof:
building loans of Landes-Bausparkasse (LBS)
4. Loans and advances to customers
thereof:
secured by mortgages
municipal loans
secured by ship mortgages
building loans of Landes-Bausparkasse
from allocations (building society loans)
other
thereof:
secured by mortgages
5. Bonds and other fixed-income securities
a) money market instruments
aa) issued by public issuers
thereof:
ab) issued by other issuers
thereof:
b) bonds
ba) issued by public issuers
thereof:
bb) issued by other issuers
thereof:
c) own bonds
nominal amount
6. Shares and other non-fixed income securities
Assets
prev. year
prev. year
2,578
85,198
68,670
3,751
87,776
4,009
165,615
169,624
3,751
4,490
22,577,838
761,468
21,472,800
22,234,268
42,169,117
37,835,943
( 163,471 )
( 4,490 )
871,387
21,706,451
102
( 124 )
7,740,061 ( 6,819,705 )
11,240,034 ( 11,705,659 )
3,614,944 ( 3,012,983 )
405,598
921,586
42,155
( 419,455 )
( 746,324 )
( 38,525 )
1,187,942 ( 1,105,383 )
1,895,327
1,353,397
(–)
127,270
269,898
2,022,597
126,109
( 147,336 )
5,490,865
5,623,923
4,456,577 ( 5,092,271 )
13,830,261
11,186,842
19,321,126
5,841,250 ( 5,182,405 )
1,249,562
1,234,289 ( 1,072,961 )
22,593,285
1,084,158
18,164,821
909,557
686,722
88,341,324
79,095,868
€ thousands
Liabilities
prev. year
1. Liabilities to banks
b) with agreed maturities or at agreed notice periods
c) savings deposits of Landes-Bausparkasse (LBS)
thereof:
for allocated contracts
prev. year
2,811,239
35,097,730
2,071
37,911,040
770
3,032,374
29,830,826
5,669
32,868,869
( 3,230 )
2. Liabilities to customers
a) savings deposits
aa) savings deposits with agreed notice of three months
ab) savings deposits with agreed notice of more than three months
ac) savings deposits at Landes-Bausparkasse
thereof:
( 5,348 )
on terminated contracts
6,219
( 17,557 )
on allocated contracts
15,158
40,945
2,806
831,172
38,111
3,453
792,002
874,923
b) other liabilities
ba) payable on demand
bb) with agreed maturities or notice periods
1,432,649
10,216,042
772,862
10,544,356
11,648,691
12,523,614
12,150,784
500,328
507,482
33,023,072
25,118,275
4,178,388
29,296,663
1,216,191
1,239,441
181,824
374,310
7. Deferred income
254,990
256,178
294,044
174,719
68,723
67,817
311,259
923,107
954,825
3,941
6,474
1,173,133
947,978
88,005,284
78,914,263
3. Liabilities of Investitionsbank relating to federal
promotion programmes with agreed maturities
or notice periods of four years or more
4. Certificated liabilities
a) bonds issued
b) other certificated liabilities
thereof:
money market instruments
5. Trust liabilities
thereof:
trust loans
8. Provisions
a) provisions for pensions
and similar obligations
b) tax provisions
c) other provisions
9. Interest equalization fund
10. Special reserve item
11. Subordinated debt
26,015,696
7,007,376
7,007,376 ( 4,178,388 )
1,208,388 ( 1,229,076 )
190,804
30,116
73,124
73
74
€ thousands
Assets
prev. year
Carried forward:
prev. year
88,341,324
79,095,868
872,580
778,061
168,703
169,897
1,216,191
1,239,441
13,115
16,029
11. Tangible fixed assets
614,217
486,916
12. Other assets
442,450
241,442
13. Prepaid expenses
94,020
105,358
14. Deferred taxes
23,334
–
91,785,934
82,133,012
7. Equity investments in non-affiliated companies
thereof:
in banks
758,097
8. Equity investments in affiliated companies
thereof:
in banks
9. Trust assets
thereof:
trust loans
10. Intangible fixed assets
Total assets
119,995
1,208,388
( 758,057 )
( 119,583 )
( 1,229,075 )
€ thousands
Liabilities
prev. year
prev. year
Carried forward:
12. Profit-sharing rights
thereof:
due in less than 2 years
51,129
78,914,263
686,288
671,288
88,839
65,000
( 51,129 )
13. Fund for general banking risks
14. Equity capital
a) subscribed capital
b) capital reserves
appropriated reserves of Investitionsbank
88,005,284
1,376,492
1,008,992
1,083,066
1,031,245
2,459,558
c) earnings reserves
ca) statutory reserves
cb) statutory reserves of Landes-Bausparkasse
cc) appropriated reserves of Investitionsbank
391,000
77,205
35,883
310,000
74,137
28,107
504,088
41,877
3,005,523
29,980
2,482,461
91,785,934
82,133,012
1. Contingent liabilities from guarantees and
indemnity agreements
5,080,209
2,808,459
a) placing and underwriting commitments
b) irrevocable lending commitments
–
6,429,911
602
5,476,161
d) net retained earnings
Total liabilities
75
76
€ thousands
1. Interest income from
a) lending and money market transactions
thereof:
interest income of Landes-Bausparkasse (LBS)
from LBS loans
from other building loans
b) debt securities and other fixed income securities
2. Interest expense
thereof:
on savings deposits of Landes-Bausparkasse
prev. year
prev. year
5,569,727
19,578
50,681
2,934
4,738,435
( 20,001)
( 39,087 )
( 2,352 )
1,024,473
975,056
6,594,200
6,206,071
22,518
6,401
( 6,281)
2,486
( 2,475)
6
(6)
7,375
104,417
66,631
40,048
64,369
38,520
15,976
100,063
44,547
2,533
8,519
( 7,558 )
9. Earnings from the liquidation of special reserve items
2,276
37,919
11. Depreciation of and adjustments to intangible
and tangible fixed assets
2,453
104,550
7. Net income or expense from trading activities
10. General administrative expenses
a) personnel expenses
aa) wages and salaries
ab) social security contributions,
retirement pensions and other benefits
thereof:
for retirement pensions
b) other administrative expenses
76,054
47,606
19,001
17,386
83,993
34,966
26,604
14,484
4. Income from profit-and-loss pooling agreements, profit
transfer agreements and partial profit transfer agreements
6. Commission expense
thereof:
commissions on contracts signed and
arranged of Landes-Bausparkasse
5,416,160
297,331
( 22,027 )
3. Other income
a) shares and other non-fixed income securities
b) equity investments in non-affiliated companies
c) equity investments in affiliated companies
5. Commission income
thereof:
commission income of Landes-Bausparkasse
on contracts signed and arranged
from loans granted after allotment
of building saving contracts
from the allocation and administration
of prefinance facilities and interim financing
388,129
105,805
95,653
44,957
43,073
150,762
29,269
( 28,166 )
111,969
262,731
99,429
238,155
32,091
26,101
379,561
252,755
77
€ thousands
prev. year
prev. year
Carried forward:
379,561
252,755
10,847
8,268
123,547
73,611
14. Income from write-backs on equity investments
in non-affiliated companies, affiliated companies
and securities treated as fixed assets
782
4,544
15. Allocations to the fund for general banking risks
23,838
25,000
2,918
298
219,193
150,122
12. Other operating expenses
13. Write-downs and value adjustments on loans
and certain securities and additions to provisions
for bad debt
16. Expenses from loss transfers
17. Results from normal business operations
19,102
19. Other taxes not shown under other operating
expenses (item 12)
603
20. Profits transferred under partial profit
transfer agreements
thereof:
Landes-Bausparkasse
3,068
22. Retained earnings carried forward from the previous year
23. Allocation of net income to earnings reserves
a) statutory reserves of Landesbank
b) statutory reserves of Landes-Bausparkasse
c) appropriated reserves of Investitionsbank
24. Net retained earnings
73,332
19,705
427
73,759
75,642
32,314
123,846
44,049
2,099
5,046
81,000
3,068
–
15,775
3,068
272
41,877
29,980
( 3,068)
Notes
Notes to the Annual Accounts
and Group Annual Accounts as at December 31, 2001
80
Legal Form and Shareholders
80
Consolidation Principles and Companies
included in the Group Accounts
81
Accounting and Valuation Principles
84
Information on Assets
88
Information on Liabilities
including:
90
- Statement of Changes in Equity Capital
92
Information on the Statement of Income
including:
92
- Segment Report
95
- Group Cash Flow Statement
96
Other Information
including:
96
- Liable Capital
98
- Derivatives Business
102
- Shareholdings Pursuant to sec . 285 No. 11
of the German Commercial Code ( HGB )
104
105
Supervisory Board
107
Managing Board
79
80
Notes
Legal Form
and Shareholders
Landesbank Schleswig-Holstein Girozentrale (LB Kiel) is
a legal entity under public law.
The Bank’s subscribed capital is held by Westdeutsche Landesbank Girozentrale, Düsseldorf /Münster
(39.9 %), Landesbank Baden-Württemberg, Stuttgart
(10 %), the State of Schleswig-Holstein (25.05 %) and
the Savings Banks and Giro Association of SchleswigHolstein (25.05 %).
The State of Schleswig-Holstein, the Savings Banks
and Giro Association of Schleswig-Holstein, Westdeutsche Landesbank as well as the Landesbank BadenWürttemberg are jointly and severally liable for
obligations of LB Kiel that cannot be met from its
assets.
The State of Schleswig-Holstein is liable for the
obligations arising from the business activities of the
Investitionsbank.
Governmental control is exercised by the Minister of
Economic Affairs, Technology and Transport of the State
of Schleswig-Holstein.
Consolidation Principles and Companies
included in the Group Accounts
The accounts of the individual companies of the Group
are prepared in accordance with the accounting and
valuation methods applicable to LB Kiel. Claims and
liabilities, expenses and income as well as interim
results between companies included in the Group
accounts are eliminated.
Investitionsbank Schleswig-Holstein (IB) and LandesBausparkasse Schleswig-Holstein (LBS) are organisationally independent but legally dependent central departments of LB Kiel.
As the central funding and promotion institute,
Investitionsbank supports the State of Schleswig-Holstein in fulfilling economic and structural tasks, offering
impartial services in the fields of industry, residential
construction, the environment and energy, municipal
promotion, urban and agricultural development as well
as project management.
The branches in Luxembourg, Copenhagen and
Helsinki are also included.
The Group annual accounts include LB Kiel, the
Landesbank Schleswig-Holstein International S. A.
Group, Luxembourg, LB Schleswig-Holstein Finance B.V.,
Amsterdam, Gudme Raaschou Bankaktieselskab, Copenhagen, as well as the 49.5 % investment in the
Hamburgische Landesbank Group, Hamburg. In addition,
the Group annual accounts include the SchleswigHolstein casinos as wholly owned subsidiaries for the
first time.
Notes
Accounting and Valuation
Principles
The annual accounts of LB Kiel and the Group have
been compiled in accordance with the German Commercial Code (HGB) and Ordinance Regarding Accounting for Banks (RechKredV).
The assets and liabilities as well as the expenditure
and income of the Investitionsbank Schleswig-Holstein
and the Landes-Bausparkasse, which publish separate
annual accounts, are consolidated in the balance sheet
and statement of income of LB Kiel unless stated
otherwise.
Assets, liabilities and pending transactions are valued
in accordance with sec. 252 et seq. and sec. 340 et seq.
of the German Commercial Code (HGB).
In accordance with sec. 9 of the Ordinance Regarding
Accounting for Banks (RechKredV), claims on banks and
customers and liabilities to banks and customers,
savings deposits as well as certificated liabilities have
been broken down according to residual maturities.
Pro-rata interest is not to be broken down according to residual maturities pursuant to sec. 11 (3) of the
Ordinance Regarding Accounting for Banks (RechKredV) and is stated in the first maturity band.
Currency Translation
Assets and liabilities in foreign currencies are converted
at the official mean rate of exchange prevailing on the
balance-sheet date. Income from currency translations
are reported only if it is specifically covered or covered
in the same currency.
The Copenhagen and Helsinki branches’ as well as
the Copenhagen subsidiary’s financial statements, which
are compiled in foreign currencies, are also converted
at the official mean rate of exchange.
Forward transactions and hedging operations specifically related to such transactions have been treated as
valuation units.
Interest Rate and Currency Swap Agreements
The Bank has entered into interest rate and currency
swap agreements to hedge open positions, to control
its overall interest rate position and for trading purposes. In the fiscal year 2001, results from internal interest
rate swap agreements are included in EUR in the statement of income for the first time. The conclusion of
internal agreements is subject to conditions including
the essential condition to conclude them at market
terms. Internal transactions did not have a material
impact on the result. Gross results from interest rate
swap agreements are shown separately under interest
income and expense.
Claims and Liabilities
Claims are stated with the nominal amount outstanding
and liabilities with the amount repayable. Discounts and
premiums are stated under deferred items as an asset
or liability accordingly and are dissolved pro rata temporis.
Value adjustments and specific provisions are made
to cover discernible risks in the loan portfolio. Latent
risks in the loan portfolio are covered by general bad
debt provisions. Individual value adjustments and
general bad debt provisions are offset against the loan
portfolio in the balance sheet.
Securities
The securities held in the Bank’s and the Group’s
trading portfolio and in the liquidity reserve are valued
strictly according to the lower of cost or market
principle.
Unlike previous years, securities held in the investment portfolio of the Group were partly valued according in 2001 to the diluted lower of cost or market
principle as they are intended for long-term investment.
This parts consists of bonds and other fixed-income
securities in the amount of € 4.0 billion and shares and
other non-fixed income securities in the amount of
€ 0.2 billion.
Original values are reinstated both in the commercial balance sheet and the tax balance sheet as required
under the 1999/2000 /2002 Tax Relief Act.
81
82
Notes
All interest-bearing securities held in the trading
portfolio and denominated in EUR are included in a
single interest-bearing portfolio. All elements of the
interest-bearing portfolio are valued at the market
value as of December 31, 2001. The resulting unrealized
losses and profits are balanced out. Reserves for anticipated losses are formed for a negative balance.
A positive balance is not taken into account.
Equity Investments
Equity investments in affiliated and non-affiliated companies are stated at cost less depreciation, if applicable.
Tangible Fixed Assets
Tangible fixed assets whose use is limited by time are
written off in accordance with the relevant tax regulations. Minor-value assets are fully written off in the year
they were purchased.
The Bank has sold land and buildings worth € 92.0
million to subsidiaries and has concluded long-term
lease agreements for their continued use by the Bank
under a sale and leaseback transaction. This resulted in
a reduction of on-balance sheet fixed assets of the
Bank by € 55.3 million.
Option Premiums
Option premiums paid are carried at their purchase
costs. They are written down to their market price in
accordance with the lower of cost or market principle.
In the case of options sold, provisions are made for
potential losses. Valuation units are taken into account.
Deferred Taxes
In the fiscal year 2001, deferred taxes in the amount of
€ 23.3 million are stated for the first time by the Bank
pursuant to sec. 274 (2) of the German Commercial
Code. They result from the different treatment for tax
and commercial balance sheet purposes of option
premiums received and reserves for anticipated losses.
The amount of deferred taxes is calculated based on
the tax rates applicable. Deferred taxes will be written
back in future years upon the tax benefits taking effect.
Provisions
Provisions for pension obligations have been established
on the basis of actuarial principles based on the life
tables of Dr. Klaus Heubeck and are valued pursuant to
German GAAP. The adjustment amount resulting from
the adoption of the actuarial tables published in 1998 is
fully allocated to provisions for commercial balance
sheet and tax purposes up to 2001.
Reserves for contingencies resulting from the duty
to grant benefits to pensioners and dependants were
also established by the Bank in the FY 2001; moreover,
in line with a decision by the Federal Constitutional
Court relating to sec. 18 of the Law Relating to Company Pension Plans, a reserve of € 2.1 million was
established to cover certain employees’ non-forfeitable
legal rights to future pension payments.
Adequate provisions relating to early retirement
have been made. In addition, indirect pension-like
obligations in accordance with art. 28 (2) EG HGB exist
at Group level.
Interest Equalization Fund
The “ interest equalization fund ” represents a value
adjustment for all interest-free or low-interest claims
arising from the promotion programmes of the Investitionsbank which were disbursed by December 31, 1994
and from 1999 to 2001. The claims are carried as assets
at their nominal value. Therefore, the fund functions as
a provision. Regarding the interest-free or low-interest
Notes
claims disbursed between 1995 and 1998, the State of
Schleswig-Holstein is obliged to purchase these claims
at their nominal values upon request.
Special Reserve Item
The appreciation of balance sheet assets due to the
1999/2000 /2002 Tax Relief Act was effected pursuant
to sec. 280 (1) of the German Commercial Code. Such
appreciation, which had been allocated in part to the
special reserve item in the fiscal year 1999 according to
sec. 273 of the German Commercial Code in conjunction with sec. 52 (16) of the German Income Tax Act,
was written back pro rata temporis in the fiscal year
2001 as planned. This impacted earnings. As far as assets
were disposed of during the fiscal year, the corresponding amount of the special reserve item was fully
written back.
Fund For General Banking Risks
In order to hedge general bank risks, an amount of
€ 33.6 million at group level was allocated to the “ fund
for general banking risks”. Allocations are stated separately in the statement of income.
Equity Capital
Silent participations accepted in the fiscal year in order
to strengthen the Bank’s equity capital base comply
with the requirements contained in sec. 10 (4) of the
German Banking Act (KWG) and are classified as liable
capital. In the balance sheet, silent participations are
stated under subscribed capital. Unrealized reserves of
€ 21.5 million on securities in the Bank’s banking book
were identified. These qualify as supplementary capital
pursuant to sec. 10 para. 2 b sentence 1 No. 7 KWG in
conjunction with sec. 10 para. 4 a and 4 c KWG.
Capital is consolidated on the basis of the values
applicable on the date of first-time consolidation for
the relevant companies.
The difference arising from capital consolidation
pursuant to sec. 301 para. 1 sentence 2 No. 1 of the
German Commercial Code is included in the Group
reserves.
The liabilities-side difference stated in the Group
reserves from the capital consolidation of a total of
€ 1,089.7 million is the result of netting an assets-side
difference of € 27.7 million against a liabilities-side
difference of € 1,117.4 million.
The item “minority interests” contains shares in fully
consolidated companies which are held by third parties.
Lending Commitments
The Bank’s liabilities resulting in a credit risk are shown
as irrevocable lending commitments.
Investitionsbank
In addition to Investitionsbank’s payment obligations
resulting from promotion activities for construction and
investment loans, Investitionsbank has a payment obligation of € 38.3 million for the future acquisition of
state properties.
In the fiscal year, Investitionsbank sold its shares of
LEG Schleswig -Holstein Entwicklungsgesellschaft mbH
at a gain of € 24.6 million. The item “other operating
income” of Investitionsbank includes lease income of
the “state properties” special-purpose fund. It amounts
to € 30.0 million in the fiscal year.
83
84
Notes
Information on the Balance Sheet and Statement of Income as well as
the Group Balance Sheet and Group Statement of Income
Information on Assets
Claims on Associated Savings
Banks
Loans and advances to banks include
loans and advances to associated
savings banks:
Claims on Affiliated Companies
The following items include claims on
affiliated companies in securitized or
non-securitized form:
Claims on Companies in Which
Equity Investments Are Held
Claims on companies in which equity
investments are held are included in
the following items
Subordinated Claims
The following items include subordinated claims:
(as at December 31)
€ million
Bank
Group
2001
Bank
Group
2000
7,031.3
7,919.5
6,608.0
7,602.5
Bank
Group
2001
Bank
Group
2000
1,599.4
–
1,263.7
1,726.3
118.7
113.0
90.7
90.8
2.2
2.2
2.1
20.4
Bank
Group
2001
Bank
Group
2000
130.2
248.0
93.0
81.2
86.7
86.9
246.0
248.0
751.3
780.0
514.9
544.8
€ million
Bank
Bank
Bonds and other
fixed- income securities
Shares and other
non fixed- income securities
93.0
7.0
Group
2001
98.6
7.0
98.1
6.0
Group
2000
98.5
6.2
101.8
401.0
37.4
348.7
–
16.4
–
14.5
Claims on Associated
Savings Banks
€ million
Loans and advances
to banks
Loans and advances
to customers
Bonds and other
Bonds
€ million
Loans and advances
to banks
Loans and advances
to customers
Bonds and other
Bonds
Notes
Information on Securities Items
€ million
85
Bank
Group
2001
Bank
Group
2000
1,529.6
1,529.6
268.8
268.8
493.0
875.2
1.1
1.1
5,460.4
7,990.9
5,488.2
7,744.7
30.4
811.5
135.8
905.7
13,256.0
23,498.7
574.3
2,983.2
668.7
2,875.6
1,228.8
1,551.1
1,037.0
1,318.7
20.8
57.3
47.2
73.0
Bonds and other
fixed- income securities:
Money market instruments issued
by public and other issuers
Money market instruments
listed on a stock exchange
Marketable money market instruments
not listed on a stock exchange
Bonds
- issued by public issuers
Bonds listed on a
stock exchange
Marketable bonds not listed
on a stock exchange
- issued by other issuers
Bonds listed on a
stock exchange
on a stock exchange
Own bonds
Bonds listed on a
stock exchange
on a stock exchange
Equity Investments in Affiliated and
Non - Affiliated Companies
The item “equity investments in
affiliated and non-affiliated companies”
includes:
10,518.2 19,740.8
Shares and other
non- fixed income securities:
Shares and other non-fixed income securities
listed on a stock exchange
Marketable shares and other non-fixed income
securities not listed on a stock exchange
21.8
55.9
37.6
76.9
887.7
1,682.1
649.1
1,449.5
€ million
Bank
Group
2001
Bank
Group
2000
23.1
23.1
19.4
19.4
44.3
44.3
43.9
43.9
Equity investment in affiliated
and non - affiliated companies
Shares listed on a stock exchange
Marketable shares not listed
on a stock exchange
86
Notes
Trust Assets
€ million
Bank
Group
2001
Bank
Group
2000
3.0
4.3
1,208.9
3.0
4.7
1,355.4
4.9
8.2
1,226.3
4.9
8.7
1,352.6
Bank
Group
2001
Bank
Group
2000
126.5
306.2
–
109.2
0.1
1.6
22.4
1.8
0.1
–
28.4
–
27.3
47.8
52.7
79.0
134.3
11.7
152.6
20.9
43.9
11.2
110.0
20.3
€ million
Bank
Group
2001
Bank
Group
2000
Prepaid Expenses
Deferred discounts
Deferred premiums
73.0
20.4
110.7
27.2
80.1
25.0
121.7
33.9
€ million
Bank
Group
2001
Bank
Group
2000
Trust assets comprise the following:
Trust asset:
payable on demand
other loans and advances
Other Assets
The main components of this item
are:
Prepaid Expenses
€ million
Other assets
Adjustment item for
foreign currency conversion
Claims under options (caps and floors)
and collateral
Swap deferrals
Claims under options (foreign exchange
and Eurex dealings)
Collection documents, bonds due as well
as interest and dividend coupons due
Land acquired for temporary use
Prepaid Expenses include:
Breakdown by Residual Maturities
Assets according to residual
maturities:
Other loans and advances to banks
up to three months
more than three months up to one year
more than one year up to five years
more than five years
up to three months
loans and advances
with undetermined maturity
Bonds and other fixed-income securities
Bonds maturing in the following year
5,440.0
1,960.0
8,457.7
5,848.7
7,834.9
3,493.5
11,304.1
7,477.0
6,201.5 10,193.9
2,595.4 2,755.7
7,105.3 9,865.3
5,570.6 7,518.9
3,696.9
3,122.2
13,048.9
21,881.8
6,528.8
4,820.6
19,158.9
31,729.2
3,025.9 5,984.4
2,712.9 4,294.2
10,410.0 15,895.4
21,125.3 30,751.1
419.3
1.804.6
561.8
1.190.0
3,468.3
4,244.1
3,837.8
5,005.3
Notes
Fixed Assets
Tangible Fixed Assets
€ million
there of:
owner-occupied
land and
buildings
Bank
Group
Land and buildings
(excluding fixed
assets under
construction)
Bank
Group
Office
equipment
Advance payments for fixed
assets under
construction
Bank
Group
Bank
Group
Acquisition cost
487.4
582.6
147.0
237.0
0.3
0.3
113.5
191.1
Additions
189.7
189.9
3.6
3.6
0.1
0.1
22.2
44.1
84.5
85.3
84.3
86.9
–
–
2.9
6.7
–
–
–
–
- 0.4
- 0.4
–
–
Depreciation in current business year
12.3
14.3
3.6
5.6
–
–
16.8
31.0
Cumulated depreciation
21.3
46.5
7.3
29.3
–
–
89.9
156.2
571.3
640.7
59.0
124.4
–
–
42.9
72.3
€ million
Bank
Group
Acquisition cost
29.2
29.8
Additions
–
0.1
Subtractions
–
–
Appreciation /transfers
–
–
2.9
2.9
Cumulated depreciation
16.1
16.6
Book value on December 31, 2001
13.1
13.3
Subtractions
Appreciation /transfers
Book value on December 31, 2001
Intangible Fixed Assets
Depreciation in current business year
Financial Assets
€ million
Book value on
December 31, 2000
Changes in 2001
Book value on
December 31, 2001
Equity investments
in non- affiliated
companies
Bank Group
Equity investments in affiliated
companies
Bank Group
Securities stated
as fixed assets
Bank
Group
778.1
94.5
102.1
98.0
169.9
-1.2
97.8
26.0
5,881.5 13,216.4
2,576.1 3,047.8
872.6
200.1
168.7
123.8
8,457.6 16,264.2
87
88
Notes
Information on Liabilities
Liabilities to Associated Savings
Banks
The item “liabilities to banks” includes
liabilities to associated savings banks
in the amount of:
Liabilities to Affiliated Companies
Liabilities to affiliated companies are
included in the following items:
Liabilities to Companies in Which
Equity Investments Are Held
Liabilities to companies in which
equity investments are held are
included in the following balance
sheet items:
Assets Pledged as Collateral
The assets pledged as collateral are
claims under loan agreements assigned
as part of the promotion activities and
securities deposited with the ECB in
the pledged securities account in the
context of open-market transactions.
Trust Liabilities
€ million
Liabilities to associated
savings banks
€ million
Liabilities
to banks
Bonds issued
€ million
Liabilities
to banks
Bonds issued
€ million
Assets pledged as collateral
€ million
(as at December 31)
Bank
Group
2001
Bank
Group
2000
1,221.7
1,308.4
1,022.7
1,121.8
Bank
Group
2001
Bank
Group
2000
1,875.0
9.5
–
9.5
2,349.7
7.0
16.3
7.0
3.6
3.6
24.3
0.5
Bank
Group
2001
Bank
Group
2000
361.8
62.3
459.6
62.5
502.8
51.3
232.6
51.9
1,786.4
1,698.5
1,785.9
1,767.5
Bank
Group
2001
12,797.1
Bank
Group
2000
9,366.1
9,658.9
Bank
Group
2001
Bank
Group
2000
1.4
1.4
1.6
1.6
133.8
141.4
105.0
113.6
–
6.9
8.9
8.9
1,080.9
1,213.5
1,123.9
1,242.1
Trust liabilities comprise the following:
payable on demand
with agreed maturities or
at agreed notice periods
payable on demand
with agreed maturities or
at agreed notice periods
6,240.7
Notes
Other Liabilities
€ million
Bank
Group
2001
Bank
Group
2000
140.7
203.4
96.4
162.1
21.5
47.2
47.7
78.1
–
–
206.4
–
€ million
Bank
Group
2001
Bank
Group
2000
Deferred Income
Deferred discounts
Deferred premiums
236.6
6.4
285.6
12.9
228.3
5.6
283.2
12.9
This item mainly comprises:
Other liabilities
Accrued interest on subordinated debt,
profit-sharing rights
Liabilities under options
and collateral
Adjustment item for
foreign currency conversion
Deferred Income
89
This item includes:
Deferred Taxes
Provisions for deferred taxes in the amount of € 3.2 million (2000: 2.9
million) have been established in the Group. Deferred taxes are not netted
against accrued taxes.
Subordinated Debt
€ million
Subordinated Debt
Bank
1,173.1
Group
2001
2,011.9
Bank
948.0
Group
2000
1,757.7
Expenses of € 66.4 (2000: 59.3) million were incurred in the Bank in connection with subordinated debt. At Group level, they amounted to
€ 107.7 (2000: 87.2) million.
The funds were raised in GBP, CAD, YEN, NLG, PTE, LUF, USD, DEM and
EUR in an equivalent amount of € 2,011.9 million (Group level).
Carrying interest between 2.4 % and 16.0 %, these liabilities have original
maturities of 2 to 40 years.
The subordination cannot be limited and the maturity and notice period
cannot be shortened; otherwise the terms of subordination are in accordance with the relevant provisions of the German Banking Act (KWG).
Profit - Sharing Rights
The profit-sharing rights in the Bank raised in DEM and EUR amount to
€ 686.3 million (2000: 671.3 million). Group profit-sharing rights amount
to € 1,112.7 million (2000: 1,123.0 million).
Of the profit-sharing rights stated in the Bank’s balance sheet, € 40
million were raised in the year under review.
90
Notes
Statement of Changes in Equity
Capital
The statement of changes in equity
capital shows the development of the
Bank and the Group capital and the
overall Bank and Group result. It was
drawn up closely in line with the
German Accounting Standard No. 7
(DRS 7). The development of subscribed capital, capital reserves, earnings
reserves and net retained earnings are
stated separately. The “other changes”
stated in connection with the development of the Group capital and reserves result from Group capital consolidation and related allocations of net
income to earnings reserves of Group
companies.
€ 23.3 million (deferred taxes) of
the Group net income for the year of
€ 174.0 million are subject to a limitation on profit distribution pursuant to
sec. 274 para. 2 sentence 3 of the
German Commercial Code (HGB).
Bank
2001
2000
€ million
Subscribed capital, previous fiscal year
Allocations to silent participations
Subscribed capital, current fiscal year
1,009.0
367.5
1,376.5
340.5
668.5
1,009.0
Capital reserves, previous fiscal year
Allocations to capital reserves
Capital reserves, current fiscal year
1,031.2
51.8
1,083.1
967.6
63.6
1,031.2
412.2
393.1
84.1
19.1
7.7
504.0
0.0
412.2
30.0
-15.4
-12.5
123.8
25.4
-15.4
- 5.0
44.0
- 84.1
41.9
-19.1
30.0
3,005.5
2,482.5
Earnings reserves, previous fiscal year
Allocations of net income to earnings
reserves, current fiscal year
reserves, previous fiscal year
Earnings Reserves, current fiscal year
Net retained earnings, previous fiscal year
Dividend, previous fiscal year
Other changes, current fiscal year
Net income for the year, current fiscal year
reserves, current fiscal year
Net retained earnings, current fiscal year
Equity capital of the Bank, current fiscal year
Group
2001
2000
€ million
Subscribed capital and reserves, previous fiscal year
Allocations to silent participations
Allocations to capital reserves
Allocations of net income to earnings reserves
Subscribed capital and reserves, current fiscal year
2,452.5
367.5
51.8
91.8
2,963.6
1,701.3
668.5
63.6
19.1
2,452.5
Group reserves, previous fiscal year
Allocations to Group reserves
Group reserves, current fiscal year
1,020.5
69.2
1,089.7
1,002.2
18.3
1,020.5
Minority interest, previous fiscal year
Other changes
Minority interest, current fiscal year
148.3
0.7
149.0
145.1
3.2
148.3
Group net retained earnings, previous fiscal year
Dividend, previous fiscal year
Net income for the year, current fiscal year
Other changes, current fiscal year
Group net retained earnings, current fiscal year
70.5
-31.2
174.0
-133.5
79.7
58.3
-30.6
84.3
- 41.6
70.5
4,282.0
3,691.8
Group equity capital, current fiscal year
Notes
Contingent Liabilities
The majority of contingent liabilities
are loan guarantees.
These include written credit
default swaps:
Breakdown by Residual Maturities
Liabilities according to residual
maturities:
€ million
Contingent liabilites
Commitments from short positions
€ million
Liabilities to banks with agreed maturities
or at agreed notice periods
up to three months
Savings deposits
up to three months
Other liabilities to customers with agreed
maturities or at agreed notice periods
up to three months
Bonds issued
Bonds issued
maturing in the following year
Other certificated liabilities
up to three months
Bank
5,080.2
2,317.9
Group
2001
7,080.6
3,055.4
Bank
2,808.5
250.5
Bank
Group
2000
4,182.9
525.8
Bank
Group
2001
Group
2000
19,554.8
5,567.1
4,542.4
5,433.4
29,532.7
8,902.7
7,127.8
7,302.9
41.3
–
2.4
–
82.8
0.2
3.4
0.1
38.7
–
2.8
–
78.0
0.3
4.1
0.1
1,859.5
257.2
3,139.9
4,959.4
8,240.5
553.4
5,268.4
9,311.3
1,982.1
422.9
2,226.5
5,912.9
6,536.0
779.4
4,180.5
9,281.6
7,017.9
8,325.8
4,202.0
2,805.3
–
–
5,719.4
2,927.9
–
–
14,568.6 25,294.3
4,813.3 7,526.9
5,037.8 8,300.7
5,411.1 6,723.6
11,877.7 14,115.5
2,090.6
2,087.8
–
–
3,683.7
2,580.2
–
–
91
92
Notes
Information on the
Statement of Income
Segment Report
The Group segment report published for the first time
in this form presents the segments like independent
companies with own profit and cost responsibility.
The segment results are based on internal controlling
data and external data included in the 2001 financial
statements.
The segment report was prepared in accordance
with the German Accounting Standards No. 3-10
(DRS 3-10) regarding segment reports of financial
institutions.
The Bank made use of the option not to include
previous year’s figures in the segment report.
The following segments were formed:
- General lending business
Transactions with corporate and real estate clients,
savings banks, private clients as well as banks and
foreign clients – incl. the client business of our branches
in Scandinavia and our subsidiary in Luxembourg.
- Transport finance
Mainly comprises aircraft, railways, leasing, infrastructure and ship finance – incl. the corresponding activities of our subsidiary in Luxembourg.
- Trading
Money, foreign exchange and securities trading and
services – incl. the activities of our foreign subsidiaries
and branches.
- Promotion
This segment presents the result of our Investitionsbank central division.
- LBS
This segment presents the result of our
central division.
- HLB
This segment presents the result of our 49.5 %
investment in HLB.
- Others /Overhead /Consolidation
Subsidiaries which cannot be assigned to any of the
other segments, overhead and results of the consolidation.
Income and expenses were generally assigned to
segments according to the principle of causation. Net
interest income is calculated according to the market
interest rate method.
For those units not preparing financial statements,
risk provisions are based on the standard risk costs.
For those units preparing financial statements, risk
provisions correspond to those stated in the statement
of income.
Risk positions and the resulting equity capital requirements are stated in accordance with the banking
supervisory regulations (annual averages).
Segment assets include the annual average balance
sheet assets of the respective segment. The return on
regulatory capital is the ratio between operating profit
after risk provisions and average employed equity
capital. The cost-income ratio is the ratio between
administrative expenses and total income (net interest
income, net commission income, net income from
trading and the balance of other operating income and
expenses).
The reported ROE is the quotient of net income
before taxes, adjusted for allocations to reserves
pursuant to sec. 340 g of the German Commercial
Code, and the average on-balance-sheet equity capital
adjusted for net retained earnings and reserves pursuant to sec. 340 g of the German Commercial Code.
Notes
€ million
General lending
business
Net interest income
+ Net commission income
+ Net income from trading
+ Balance of other
operating income /expenses
= Total income
. /. Administrative expenses
= Operating profit before
risk provisions
. /. Risk provisions
= Operating profit after
risk provisions
Segment assets
Risk positions
Average employed equity
capital *)
Return on regulatory
capital
Cost-income ratio (CIR)
Transport
finance
Trading
Promotion
LBS
HLB
49,5 %
Others /
Overhead /
Consolidation
Group
223.8
48.9
–
71.8
19.2
–
44.2
11.4
48.3
13.8
2.4
–
37.2
2.7
–
402.2
50.8
9.7
105.0
2.3
–
898.0
137.7
58.0
-0.5
272.2
–
91.0
–
103.9
37.2
53.4
2.2
42.1
-35.8
426.9
71.8
179.1
74.9
1.168.6
70.1
13.6
27.0
39.2
29.9
154.6
162.4
496.8
202.1
77.4
76.9
14.2
12.2
272.3
16.7
671.8
55.3
20.7
27.8
- 6.3
4.3
137.9
69.5
309.2
146.8
56.7
49.1
20.5
7.9
134.4
-52.8
362.6
50,090.3
21,761.6
9,767.9
8,374.8
21,483.5
7,371.4
5,186.2
3,733.8
1,598.7
938.1
43,542.3
24,497.5
2,897.2
1,222.5
134,566.1
67,899.7
1,740.9
670.0
589.7
298.7
75.0
1,959.8
97.9
5,432.0
8.4 %
25.7 %
8.5 %
14.9 %
8.3 %
26.0 %
6.9 %
73.4 %
10.5 %
71.0 %
6.9 %
36.2 %
6.7 %
42.5 %
7.8 %
9.8 %
RO E
*)
The average employed equity capital is the regulatory capital requirement.
The geographic breakdown is based
on the domicile of the respective
Group company or branch.
€ million
Operating profit
before risk provisions
. /. Risk provisions
= Operating profit
after risk provisions
Risk positions
Average employed
equity capital
Cost-income ratio (CIR)
Germany
Europe
excl.
Germany
Asia
Others /
Consolidation
Group
543.5
194.3
149.0
104.4
11.6
–
-32.3
10.5
671.8
309.2
349.2
44.6
11.6
- 42.8
362.6
51,229.9
15,597.3
3,741.7
- 2,669.2
67,899.7
4,098.4
44.6 %
1,247.8
29.9 %
299.3
37.1 %
- 213.5
5,432.0
42.5 %
93
94
Notes
Breakdown of Statement of Income Components
Based on the Domicile of the Respective Group
Company or Branch:
€ million
Germany
Europe excl.
Germany
Asia
Germany
Europe excl.
Germany
Asia
2001
Interest income
Other income (from shares and
other non-fixed income
securities, equity investments in
non-affiliated and affiliated companies)
Commission income
Other operating income
Net income from trading
Other Operating Income
2000
6,883.9
2,287.1
184.2
6,470.5
1,948.1
209.7
97.5
143.1
224.4
43.2
0.6
45.2
3.4
14.8
–
2.3
0.1
–
96.4
151.6
108.2
19.7
2.2
43.2
10.3
6.4
–
2.3
–
1.2
€ million
Bank
Group
2001
Bank
Group
2000
Refund of expenses by third parties
Income from the disposal of office
equipment and land and buildings
25.6
32.1
30.0
33.5
36.9
36.9
–
–
This item mainly comprises:
Notes
Group Cash Flow Statement
The cash flow statement published for the first time in
this form shows the development of the Group cash
flows. Cash flows from operating activities, cash flows
from investing activities and cash flows from financing
activities are shown separately. The sum of these cash
flows corresponds to the change in financial resources
between the beginning of the period under review and
the end of the period. Financial resources comprise the
balance sheet item “cash reserve”. Hamburgische Landesbank accounts for € 39.7 million (2000: 32.0 million)
of the cash reserve.
The cash flow statement was drawn up in accordance
with the banking-specific German Accounting Standards
No. 2-10 (DRS 2-10).
€ million
1. Net income for the period
Adjustments
2. Write- downs, value adjustments and appreciation on
claims, tangible and financial fixed assets
Write-downs on tangible and financial fixed assets,
allocations to value adjustments
Appreciation on tangible and financial fixed assets,
reversal of value adjustments
3. Change in provisions
4. Other non-cash expenses / income
5. Profit / loss from the disposal of tangible and financial fixed assets
Losses
Profits
6. Other adjustments
7. Subtotal
8. Change in loans and advances
a) to banks
b) to customers
9. Change in securities (excl. financial fixed assets)
10. Change in other assets from operating activities
11. Change in liabilities
a) to banks
b) to customers
12. Change in certificated liabilities
13. Change in other liabilities from operating activities
14. Interest and dividends received
15. Interest paid
16. Taxes on income paid
17. Cash flows from operating activities
18. Inflow from the disposal of
a) financial fixed assets
b) tangible fixed assets
19. Outflow for investments in
a) financial fixed assets
b) tangible fixed assets
20. Cash flows from investing activities
21. Inflow from equity capital contributions
22. Distributions from equity capital
a) Dividend payments
b) Partial profit transfer
23. Changes in funds from other capital
24. Cash flows from financing activities
25. Financial resources at the beginning of the period
26. Cash flows from operating activities
27. Cash flows from investing activities
28. Cash flows from financing activities
29. Changes in financial resources due to changes of exchange rates,
scope of consolidation and valuation
30. Financial resources at the end of the period
2001
2000
174.0
84.3
462.8
272.9
677.1
478.2
- 214.3
-205.3
-79.5
-18.2
- 89.6
40.2
-129.8
70.5
- 26.5
- 37.8
15.2
- 53.0
- 677.2
-227.7
- 5,947.6
-20.7
-5,926.9
- 516.7
-153.3
- 8,925.0
- 3,500.2
- 5,424.8
- 2,371.9
- 278.3
8,688.3
4,828.8
3,859.5
-1,481.7
731.7
5,382.8
3,082.2
2,300.6
3,592.1
- 315.8
9,455.0
- 8,354.1
- 83.4
4,156.6
840.3
740.5
99.8
6,514.7
- 463.2
8,729.2
- 7,816.0
-133.1
2,386.1
3,707.1
3,661.4
45.7
- 5,590.3
- 5,344.7
- 245.6
- 7,179.0
- 6,726.1
- 452.9
- 4,750.0
419.3
-173.4
- 36.0
-137.4
- 3,471.9
732.1
-129.2
- 35.5
- 93.7
244.4
490.3
236.0
4,156.6
- 4,750.0
490.3
432.8
1,035.7
285.2
2,386.1
- 3,471.9
1,035.7
2.9
135.8
0.9
236.0
95
96
Notes
Other Information
Liable Capital
Including allocations to reserves and
other changes resulting from the 2001
annual accounts, the Bank’s total liable
capital amounts to € 4,638.3 (2000:
3,987.8) million. Group’s total liable
capital amounts to € 7,152.2 million
(2000: 6,444.6 million).
The supplementary capital in the
Bank’s balance sheet includes unrealized
reserves of € 21.5 million relating to
securities in the investment book.
The capital resources of € 156.3
million (2000: 105.9 million) with
which Investitionsbank was provided
in conjunction with the formation of
the “state properties” special-purpose
funds are not used to back riskweighted assets of the Bank.
€ 25 million of the reserves formed
pursuant to sec. 340 f of the German
Commercial Code included in the
supplementary capital according to
sec. 10 a of the German Banking Act
totalling € 1,207.3 million cover risks
in the Group annual accounts arising
from the insolvency proceedings
instituted against KirchMedia after
preparation of the annual accounts.
€ million
2001
2000
Liable capital of the Bank acc. to sec. 10
of the German Banking Act (KWG)
Subscribed capital
Silent participations
Capital reserves
Earnings Reserves
Intangible fixed assets
Core capital
Supplementary capital
Equity investments acc. to sec. 10 para.
6a sentence 1 No. 4 a of the German Banking Act
Tier 3 capital
Total liable capital – Bank
219.9
1,156.6
926.7
504.1
88.8
-13.1
2,883.0
1,759.2
219.9
789.1
925.3
412.2
65.0
-16.0
2,395.5
1,594.4
- 3.9
–
4,638.3
- 2.1
–
3,987.8
Liable capital of the Group companies acc. to
sec.10a of the German Banking Act (KWG)
Core capital
Supplementary capital
Deduction from equity capital
Total liable capital – Group companies
Tier 3 capital not counting towards the capital base
Group total liable capital
1,322.7
1,207.3
-16.1
2,513.9
–
7,152.2
1,303.5
1,169.1
-15.8
2,456.8
–
6,444.6
Banking Law Ratios
Having consistently complied with the capital adequacy
and liquidity stipulations under German Banking Law
during the year under review, the Bank has fulfilled the
requirements for recognition as a qualified bank as
defined by sec. 54 a para. 2 No. 9 c of the German
Insurance Supervision Act (VAG).
Deposit Insurance Fund
The Bank is a member of the Landesbanken /Girozentralen deposit insurance fund, which falls under the
deposit protection system of the German Savings Bank
Organization.
The deposit protection system ensures the liquidity
and solvency of all affiliated institutions.
In addition to the above-mentioned, the liabilities of
LB Kiel are fully backed by its guarantors.
Notes
Contingencies Not Shown in the Balance Sheet
As a result of being a shareholder in a number of smaller companies, the Bank is obliged to pay up certain
fractions of share capital not yet fully subscribed and
paid.
With respect to the Bank’s stake in LiquiditätsKonsortialbank GmbH, the Bank has an additional
funding obligation and a limited contingent liability for
the additional funding obligations of other shareholders.
Landesbank Schleswig -Holstein holds a 49.5 % stake
in Hamburgische Landesbank.
Furthermore, the Bank has concluded long-term
rental agreements with two of its subsidiaries.
Letter of Comfort
Landesbank Schleswig -Holstein will, except in the
case of political risk, ensure that the following Group
companies will be able to meet their obligations:
Landesbank Schleswig-Holstein International S. A.,
Luxembourg, and LB Schleswig-Holstein Finance B.V.,
Amsterdam.
Introduction of Euro Notes and Coins
In connection with the introduction of the Euro notes
and coins, the Bank received € 15.5 million (Group:
35.4 million) from Deutsche Bundesbank under the
frontloading procedure in the last quarter of 2001.
€ 7.0 million (Group: 15.9 million) thereof were passed
on to customers under the sub-frontloading procedure.
Forward Transactions
The Bank’s and the Group’s unsettled foreign currency,
interest-related and other forward transactions outstanding at year-end were primarily entered into in
order to hedge interest rate and market price volatility.
The Bank and the Group are mainly involved in:
Currency-Related Forward Transactions
- Forward exchange transactions
- Forex swap deals
- Interest -rate /currency swaps
- Written currency options
- Purchased currency options
Interest-Related Forward Transactions
- Forward securities transactions
- Stock futures transactions
- Forward rate agreements
- Written interest-rate options
- Interest-rate swaps
- Interest -rate forward transactions
- Purchased interest-rate options
- Interest-rate futures
Other Forward Transactions
- Written share options
- Index forward transactions
- Written index options
- Purchased share options
- Purchased index options
Credit derivatives
- Credit default swaps (guarantee /guarantor)
- Total return swaps ( guarantor)
- Credit spread options ( guarantor)
97
98
Notes
Derivatives Business
ted the Group’s and Bank’s currency-based business.
The volume of equity transactions and transactions
with other price risks amounted to € 1.6 billion. Most
of these contracts held in the investment book have a
term of more than one year.
Proprietary trading transactions accounted for
€ 89.4 billion or approx. 42 % of the Group’s total
derivatives business.
The Group’s and the Bank’s derivatives business is
solely conducted with counterparties of immaculate
credit standing. Over 93 % of the total nominal volumes
were transacted with OECD banks.
Derivatives business developed favourably in the past
fiscal year.
At year-end 2001, the nominal volume of the Group’s
interest-based business amounted to € 154.3 billion,
with interest-rate swaps accounting for € 128.5 billion.
The short-term maturity band accounted for most
of the volume growth.
Forward exchange transactions (€ 42.7 billion)
accounted for the bulk of currency-based business
(€ 52.0 billion).
Contracts with a term of less than one year domina-
Derivatives Business – Group Volume
€ million
Interest-rate contracts
Interest-rate swaps
FRAs
Interest-rate options
- long positions
- short positions
Caps, floors
Stock market contracts
Other interest - rate forward transactions
Interest rate contracts – total
Currency contracts
Forward exchange transactions
Interest-rate / currency swaps
Currency swaps
Currency options
- long positions
- short positions
Other currency-related forward transactions
Currency contracts – total
Equity transactions and transactions
with other price risks
Stock futures transactions
Stock options
- long positions
- short positions
Other forward transactions
Equity transactions and transactions
with other price risks – total
Derivatives business – market price risks
Nominal amounts
Nominal amounts
Credit risk equivalents *)
Dec. 31, 2001
Replacement
costs * *)
Dec. 31, 2001
Dec. 31, 2001
Dec. 31, 2000
128,460.2
19,777.3
98,965.4
7,238.5
597.4
7.8
1,971.3
21.4
138.5
450.8
831.2
2,856.5
1,832.8
154,347.3
60.8
15.4
1,009.7
6,410.3
1,019.3
114,719.5
2.3
–
2.9
–
0.3
610.7
9.3
–
7.5
–
0.8
2,010.3
42,655.7
6,976.3
–
38,998.8
8,957.4
–
196.7
159.8
–
482.8
414.9
–
1,334.7
1,050.1
–
–
52,016.9
1,067.7
868.5
–
–
49,892.3
13.9
–
–
34.8
–
–
370.4
932.4
1.2
–
–
–
17.8
–
3.6
1,620.0
37.7
2,7
69.7
1,275.4
1.0
–
–
45.9
1.2
–
–
78.5
1,642.7
208,006.9
1,385.6
165,997.3
46.8
1,027.9
79.7
3,022.4
The volume development stated includes the gross volume of all long and short positions.
*)
**)
The credit risk equivalents are calculated in accordance with Principle I using the standard method (mark-to-market method).
Replacement costs are defined as the potential expenditure which would be incurred in connection with a replacement trade required to restore a position following a counterparty default.
Notes
Derivatives Business – Trading Transactions *)
€ million
Nominal amounts
Nominal amounts
Dec. 31, 2000
Credit risk
equivalent
Dec. 31, 2001
Replacement
costs
Dec. 31, 2001
Dec. 31, 2001
Interest-rate contracts
Currency contracts
Equity trading
70,344.1
19,071.8
8,3
48,367.7
13,660.2
79,4
213.8
103.4
–
621.3
213.1
–
Total
89,424.1
62,107.3
317.2
834.4
Nominal amounts
Nominal amounts
Dec. 31, 2001
Dec. 31, 2000
Credit risk
equivalent
Dec. 31, 2001
Replacement
costs
Dec. 31, 2001
194,629.7
342.4
11,818.6
1,216.2
147,484.0
402.1
16,873.1
1,238.1
862.9
2.3
162.7
–
2.810.4
7.8
204.2
–
208,006.9
165,997.3
1,027.9
3,022.4
Derivatives Business – Breakdown by Counterparties
€ million
OECD banks
Non-OECD banks
Non-banks
Authorities
Total
Derivatives Business – Breakdown by Maturities * *)
€ million
Residual maturities
up to three months
up to one year
between one and five years
Total
Foreign Currency Business
Interest-rate risks
Currency risks
Dec. 31, 2001
Dec. 31, 2000
Dec. 31, 2001
Dec. 31, 2000
38,852.4
35,430.1
38,755.7
41,309.2
15,750.4
29,949.7
32,646.0
36,373.4
29,945.0
15,797.0
4,323.0
1,951.9
24,297.3
19,037.8
4,650.5
1,906.7
128.0
143.8
1,094.6
276.3
126.1
224.6
903.1
131.8
154,347.3
114,719.5
52,017.0
49,892.3
1,642.7
1,385.6
€ million
Foreign currency assets
Foreign currency liabilities
*)
** )
Stock price
and other price risks
Dec. 31, 2001 Dec. 31, 2000
Bank
24,199.6
24,014.8
Group
2001
43,528.5
37,729.0
Bank
Group
2000
19,406.1 37,069.1
22,073.5 34,722.9
Trading transactions are defined as contracts concluded to make a profit from short-term changes in market prices or from dealer’s margins.The result of these transactions
is shown under net income from trading.
The breakdown by maturities is based on the residual maturities of the contracts. For interest-rate futures, this is the residual maturity of the underlying, for currency futures
and transactions with equity and other price risks, the residual maturity of the contract.
99
100
Notes
Cover Computation
€ million
Mortgage bond cover
Bearer bonds
Registered bonds
Registered bonds used as collateral
Redeemed and terminated bonds
Cover assets
Excess cover
Municipal bonds used as cover
Municipal bearer bonds
Municipal registered bonds
Registered bonds used as collateral
Redeemed and terminated bonds
Cover assets
Securities and borrower’s note loans issued
by public issuers
Substitute cover
Excess cover
Average Number of Employees
in 2001
Bank excl. LBS and IB
Landes-Bausparkasse (LBS)
Investitionsbank (IB)
Subtotal
LB Schl.-Holst. International S. A.
Hamburgische Landesbank * )
Gudme Raaschou
Casinos * * )
Total
including: part-time employees
plus: apprentices
*)
**)
Remuneration Paid to the Members
of the Managing Board and the
Supervisory Board of the Bank
Bank
Group
2001
Bank
Group
2000
- 2,729.9
- 2,708.2
- 656.7
- 0.1
- 6,094.9
- 3,619.7
- 3,607.2
- 684.6
- 0.1
- 7,911.6
- 2,193.4
- 2,096.0
- 673.3
–
- 4,962.7
- 3,148.5
- 2,846.2
- 703.3
–
- 6,698.0
6,579.2
–
9,216.6
–
6,071.8
–
8,614.4
–
484.3
1,305.0
1,109.1
1,916.4
- 8,233.9 -10,129.4 -11,250.5 -13,523.8
- 6,620.3 - 8,587.0 - 7,600.8 - 9,674.4
-1,196.5 -1,225.5 -1,096.1 -1,147.9
–
–
- 0.1
- 0.1
-16,050.7 -19,941.9 -19,947.5 - 24,346.2
10,181.6
6,730.0
11,396.0
9,717.0
11,018.8 12,467,6
6,805.2 10,114.2
–
–
16,911.6
–
–
21,113.0
2,612.7 2,612.7
269.0
269.0
20,705.7 25,463.5
860.9
1,171.1
758.3
1,117.4
male
814
92
133
1,039
37
1,179
62
135
2,452
77
71
total
1,540
211
322
2,073
84
2,391
79
195
4,822
639
171
2000
1,459
215
326
2,000
75
2,222
85
–
4,382
593
189
female
726
119
189
1,034
47
1,212
17
60
2,370
562
100
Total headcount of Hamburgische Landesbank
For the first time the casinos were included in the Group annual accounts in 2001.
The total remuneration paid to the Managing Board in 2001 was € 2.4 (2000:
2.1) million, including € 0.1 (2000: 0.1) million from the subsidiaries. Remuneration paid to the Supervisory Board amounted to € 0.3 (2000: 0.3) million.
Total remuneration paid to former members of the Managing Board or their
surviving dependants was € 1.2 (2000: 1.0) million. Pension provisions in an
amount of € 12.2 (2000: 8.7) million have been made for members or former
members of the Managing Board or their surviving dependants.
Notes
Loans to Members of the
Executive Bodies
€ million
Managing Board
Supervisory Board
Bank
0.7
2.8
Group
2001
0.7
2.8
Bank
1.2
2.6
Group
2000
1.2
2.6
Seats of the Members of the Managing Board
on other Supervisory Boards
- DGZ Deka Bank Deutsche Kommunalbank,
Frankfurt /Main
- Hamburgische Landesbank - Girozentrale -, Hamburg
Luxembourg
- Minimax GmbH, Bad Oldesloe
- Howaldtswerke-Deutsche Werft AG, Kiel
Hans Berger
- Deka Deutsche Kapitalanlagegesellschaft mbH,
Frankfurt / Main
- dvg Hannover Datenverarbeitungsgesellschaft mbH,
Hannover
- eBS eBanking Services Nord GmbH i.G., Kiel
- Engram AG, Bremen
- Flender Werft AG, Lübeck
- Hamburgische Landesbank - Girozentrale -, Hamburg
- Nordex AG, Oberhausen
- S-Online Schleswig-Holstein GbR, Kiel
- SIZ Informatik – Zentrum der Sparkassenorganisation
GmbH, Bonn
- s-NetLine GmbH, Kiel
- LBS Immobilien GmbH (LBSI), Kiel
Dieter Pfisterer
- eBS eBanking Services Nord GmbH i.G., Kiel
- Gesellschaft für Wagniskapital
Mittelständische Beteiligungsgesellschaft
Schleswig-Holstein GmbH – MBG , Kiel
- IKB – Leasing GmbH, Hamburg
- ORGA Kartensysteme GmbH, Flintbek
- Wankendorfer Baugenossenschaft eG, Wankendorf
- Wirtschaftsakademie Schleswig- Holstein, Kiel
- LBS Immobilien GmbH (LBSI), Kiel
- Deka Immobilien Investment GmbH, Frankfurt
Dr. Erwin Sell (since May 1, 2001)
- Gudme Raaschou Bankaktieselskab,
Kopenhagen / Denmark
- PCA Corporate Finance Oy, Helsinki /Finland
- WestLB Polska S.A., Warsaw
- A/O WestLB Vostok, Moscow
Luxembourg
Franz S. Waas, Ph. D. (since January 1, 2001)
- Gudme Raaschou Bankaktieselskab,
Kopenhagen / Denmark
Luxembourg
- s-NetLine GmbH, Kiel
- S-Online Schleswig-Holstein GbR, Kiel
- Hanseatische Wertpapierbörse, Hamburg (BÖAG)
101
102
Notes
Shareholdings Pursuant to sec. 285 No. 11 of the
German Commercial Code (HGB)
The Group financial statements include Companies 1)
to 11). The other companies were not consolidated as
they are not material to depict a true and fair view of
the net assets, financial condition and earnings of the
Group. All computations reflect the companies’ most
recent financial statements.
Number, Name, Headquarters
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
26)
27)
28)
29)
30)
31)
32)
33)
34)
35)
36)
37)
38)
39)
40)
41)
42)
43)
44)
45)
46)
47)
Landesbank Schleswig-Holstein International S. A., Luxembourg
LB Schleswig-Holstein Finance B.V., Amsterdam
Hamburgische Landesbank - Konzern, Hamburg
Gudme Raaschou Bankaktieselskab, Copenhagen
NOBIS Société des Banques Privées S.A., Luxembourg
Spielbank SH GmbH, Kiel
Spielbank SH GmbH & Co. Casino Stadtzentrum Schenefeld KG, Schenefeld
Spielbank SH GmbH & Co. Casino Kiel KG, Kiel
Spielbank SH GmbH & Co. Casino Lübeck – Travemünde KG, Lübeck -Travemünde
Spielbank SH GmbH & Co. Casino Westerland auf Sylt KG, Westerland
Spielbank SH GmbH & Co., Casino Flensburg KG, Flensburg
LiLux Management S. A., Luxembourg
Verwaltungs- und Treuhandgesellschaft von 1963 mbH, Kiel
Wirtschafts- und Aufbaugesellschaft Stormarn mbH, Bad Oldesloe
Kieler Grunderwerbsgesellschaft mbH, Kiel
Schleswig-Holsteinische Kapital-Beteiligungsgesellschaft mbH, Kiel
Anker Schiffsbetreuungsgesellschaft mbH, Kiel
W. Jacobsen AG, Kiel
Schleswig-Holsteinische Immobilienfonds KG, Kiel
BIG-Bau-Investitionsgesellschaft mbH, Kiel
LBS Immobilien GmbH, Kiel
Gesellschaft für Wagniskapital
Mittelständische Beteiligungsgesellschaft Schleswig-Holstein GmbH, Kiel
Grundstücksverwaltungsgesellschaft der schleswig-holsteinische
Sparkassenorganisation mbH, Kiel
Cape May Shipping Company Ltd., Monrovia
LBSH Leasing Verwaltungs GmbH, Lockstedt
Bausteine für Kinder, Kindertagesstätten Bau- und EntwicklungsGmbH, Lockstedt
Kieler Förde-Verwaltungsgesellschaft mbH, Kiel
Baltic Sea GmbH, Kiel
Nord-Ostsee Verwaltungsgesellschaft mbH, Kiel
Kiel-Hörn Vermarktungsgesellschaft mbH, Kiel
MDK Holdings Limited, London
Gudme Raaschou AB, Stockholm
eBanking Services Nord GmbH, Kiel
LB Kiel Nordic Finance AB, Stockholm
Gebäudemanagement Schleswig-Holstein, Kiel
Schleswig-Holstein ImmobilienPartner GmbH, Kiel
Oy FoxNord AB, Helsinki
Gudme Raaschou Administration A /S, Copenhagen
PCA Corporate Finance Oy, Helsinki
LB Kiel Färgaren AB, Stockholm (vormals: Hedera Hässleholm AB)
LB Kiel Färgaren KB (vormals: KB Hedera Hässleholm)
LB Kiel Lärkan AB, Stockholm
Fastighetsbolag Jyväskylä Agora Oy
Specialbonde i Stockholm AB, Stockholm
LB Kiel Gnarp AB, Stockholm
ECOMARES GmbH & Co. KG, Büsum
P. E.R. Flucht - und Rettungsleitsysteme GmbH, Barsbüttel
Equity capital 1)
€ million
Capital share
in %
Result
€ million
190.09
1.51
3,673.64
TDKK 98.620
12.82
0.03
4.10
4.60
1.37
2.57
5.89
1.07
0.03
0.03
0.03
0.51
0.03
4.43
0.18
12.79
0.26
100.00
100.00
49.50
100.00
80.00
100.00
100.00
100.00
100.00
90.00
90.00
100.00
100.00
24.00
100.00
100.00
100.00
92.51
100.00
24.00
100.00
35,00
14.62
56.1
3)
0.03
0.0002
0.03
100.00
100.00
100.00
3),4)
0.03
0.03
0.03
0.03
0.31
0.02
TSEK 100
0.03
TSEK 85.104
25.57
0.25
0.01
TDKK 2.116
4.68
TSEK 120
–
TSEK 100
TFIM 50
TSEK 100
TSEK 100
0.29
0.75
100.00
100.00
100.00
100.00
24.50
33.33
100.00
33.33
100.00
24.90
33.33
100.00
100.00
51.16
100.00
99.93
99.00
100.00
100.00
100.00
25.00
34.10
3)
54,45
3)
3),4)
2),3)
3)
3)
3)
3)
3)
3),4)
3)
3)
2),3)
2),3)
2),3)
3)
3)
3)
2),3)
3)
3)
2),3)
2),3)
2),3)
3)
3)
3)
3)
3)
3)
3)
3)
3)
3),4)
3)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
Notes
Number, Name, Headquarters
48)
49)
50)
51)
52)
53)
54)
55)
56)
57)
58)
59)
60)
61)
62)
63)
64)
65)
66)
67)
68)
Aura Grundstücksverwaltungsgesellschaft mbH & Co.Vermietungs KG, Wiesbaden
Azur Grundstücksverwaltungsgesellschaft mbH & Co. LBSH KG, Wiesbaden
FMS Facility Management Service GmbH, Kiel
LB Kiel Unternehmensbeteiligungsgesellschaft mbH, Kiel
Tapes GmbH & Co. KG, Pöcking
Altium Capital CICs, Moscow
Aurora Gate Oy, Helsinki
BTE Hybrid Tech. GmbH, Grube
Cabrionita Oy, Helsinki
Granville Private Equity Ltd. Partnership, Jersey
Green Stream Network Oy, Helsinki
International Fund Services & Asset Management S. A., Luxembourg
LB Kiel As AB, Stockholm
LB Kiel Blekholmen AB, Stockholm
LB Kiel Pildammen AB, Stockholm
LB Kiel Tunnan AB, Stockholm
PCA Property Finance Oy, Helsinki
West Private Equity Fund 2000 (5) GmbH & Co. KG, Düsseldorf
Marc Marco Polo Ventures GmbH & Co. KG, Krefeld
Ohltec AG, Gettorf
Dynatechnik Meßsysteme GmbH, Hamburg
103
Equity capital 1)
€ million
Capital share
in %
Result
€ million
0.03
0.01
0.03
1.10
0.03
TUSD 369
0.002
0.40
0.25
18.54
0.31
0.62
TSEK 100
TSEK 100
TSEK 100
TSEK 100
0.35
7.00
1.83
3.00
0.69
94.00
94.00
100.00
100.00
94.00
37.12
100.00
29.85
100.00
21.23
20.00
51.61
100.00
100.00
99.00
100.00
54.95
99.98
91.00
23.89
40.00
3)
Notes:
1)
The term “Equity capital ” corresponds to the definition in art. 266 and 272 of the German Commercial Code (HGB )
2)
There is a profit and loss transfer agreement with the company
3)
Not published according to sec. 286 para. 3 sentence 1 and sec. 313 para. 2 No. 4 of the German Commercial Code ( HGB)
4)
Indirect shareholdings
3)
2),3)
2),3)
3)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
3),4)
104
Notes
Chairwoman
Heide Simonis
Minister President of the State of Schleswig-Holstein,
Kiel
First Deputy Chairman
Dr. h.c. Friedel Neuber
Chairman of the Managing Board Westdeutsche
Landesbank Girozentrale, Düsseldorf
(up to August 31, 2001)
Jürgen Sengera
(since September 1, 2001)
Second Deputy Chairman
Olaf Cord Dielewicz
President of the Savings Banks and Giro Association
for Schleswig-Holstein, Kiel
Third Deputy Chairman
Heinrich Haasis
President of the Baden-Württemberg Savings Banks
Association, Stuttgart
( as at December 31, 2001)
Members Representing the Savings Banks and
Giro Association acc . to sec . 8 para. 2 of the
Statutes
Dr. Hans Lukas
Chairman of the Managing Board Sparkasse Stormarn,
Bad Oldesloe
Jörg-Dietrich Kamischke
District Administrator of the Schleswig-Flensburg
district, Schleswig
Members Representing Westdeutsche Landesbank
Girozentrale acc . to sec . 8 para. 2 of the Statutes
Dr. Karlheinz Bentele
President of the Rhineland Savings Banks
and Giro Association, Düsseldorf
Dr. Wolf-Albrecht Prautzsch
Deputy Chairman of the Managing Board
Westdeutsche Landesbank Girozentrale, Münster
Members Representing Landesbank BadenWürttemberg acc . to sec . 8 para. 2 of the Statutes
Members Representing the State of SchleswigHolstein acc . to sec . 8 para. 2 of the Statutes
Uwe Mantik
State Secretary at the Ministry of Economic Affairs.
Technology and Transport of the state of SchleswigHolstein, Kiel (up to March 31, 2001)
Michael Rocca
State Secretary at the Ministry of Economic Affairs,
Technology and Transport of the State of SchleswigHolstein, Kiel (since April 1, 2001)
Claus Möller
Minister of Finance and Energy of the State of
Schleswig-Holstein, Kiel
Hans Dietmar Sauer
Chairman of the Managing Board
Landesbank Baden-Württemberg, Stuttgart
Notes
Supervisory Board
Chairwoman
Heide Simonis
Minister President of the State of Schleswig-Holstein,
Kiel
Substitute acc . to sec . 11 para. 3 of the Statutes
Klaus Gärtner
State Secretary, Head of the State Chancellary of
the State of Schleswig-Holstein, Kiel
First Deputy Chairman
Dr. h.c. Friedel Neuber
(up to August 31, 2001)
Jürgen Sengera
(since September 1, 2001)
Dr. Adolf Franke
Member of the Managing Board Westdeutsche Landesbank Girozentrale, Düsseldorf
Seond Deputy Chairman
Olaf Cord Dielewicz
President of the Savings Banks and Giro Association for
Wolfgang Stut
Association Director of the Savings Banks and Giro
Association for Schleswig-Holstein, Kiel
(up to September 30, 2001)
Werner Helms-Rick
Association Director of the Savings Banks and Giro
Association for Schleswig-Holstein, Kiel
(since Oktober 1, 2001)
Third Deputy Chairman
Heinrich Haasis
President of the Baden-Württemberg Savings Banks
Association, Stuttgart
Gerd Wolf
Member of the Managing Board Landesbank BadenWürttemberg, Stuttgart (since January 1, 2001)
Members Representing the State of Schleswig-Holstein
Uwe Mantik
State Secretary at the Ministry of Economics Affairs,
Technology and Transport of the State of SchleswigHolstein, Kiel (up to March 31, 2001)
Peter Deutschland
Chairman of the DGB Nord, Hamburg
Uwe Döring
State Secretary at the Ministry of Finance and Energy
of the State of Schleswig-Holstein, Kiel
Claus Möller
Minister of Finance and Energy of the State of
Michael Rocca
State Secretary at the Ministry of Economic Affairs,
Technology and Transport of the State of SchleswigHolstein, Kiel (since April 1, 2001)
Members Representing the Savings Banks and
Giro Association for Schleswig-Holstein
Günter Anders
Chairman of the Managing Board Sparkasse SchleswigFlensburg, Schleswig
Norbert Gansel
Lord Mayor of the City of Kiel, Kiel
105
106
Notes
Günter Kröpelin
District Administrator of the Herzogtum Lauenburg
district, Ratzeburg
Dr. Fritz Süverkrüp
President of the Chamber of Industry and Commerce
of Kiel, Kiel
Erwin Rückemann
Chairman of the Managing Board Stadtsparkasse
Neumünster, Neumünster
Jorma Juhani Vaajoki
Kauniainen, Finland
Members Elected by the Employees
Member Representing both the State of SchleswigHolstein and the Savings Banks and Giro Association
for Schleswig-Holstein
Dr. Hans Lukas
Chairman of the Managing Board Sparkasse Stormarn,
Bad Oldesloe
Astrid Balduin
Kiel
Katarina Blanking
Copenhagen
Waltraud Fuhrmann
Vice President, Kiel
Member Representing the Landesbank BadenWürttemberg
Hans Dietmar Sauer
Chairman of the Managing Board Landesbank BadenWürttemberg, Stuttgart
Members Representing Westdeutsche Landesbank
Girozentrale
Theo Dräger
Chairman of the Managing Board Drägerwerk AG,
Lübeck
Hans-Peter Krämer
Chairman of the Managing Board Kreissparkasse Köln,
Köln
Dr. Ingrid Nümann-Seidewinkel
Senatrice, Head of the Ministry of Finance of Free and
Hanseatic City Hamburg, Hamburg (up to Oktober 31,
2001)
Dr. Wolf-Albrecht Prautzsch
Deputy Chairman of the Managing Board Westdeutsche
Landesbank Girozentrale, Münster
Helmut Gründel
Kiel
Ditmar Höret
Kiel
Knuth Lausen
Kiel
Karl-Heinz Ravn
Vice President, Kiel
Michael Schmalz
Kiel
Bettina Scholtys
Kiel
Gaby Woelk
Kiel
Notes
Managing Board
Chairman
Hans Berger
Deputy Chairman
Dieter Pfisterer
Peter Pahlke
(up to July 31, 2001)
Dr. Erwin Sell
(since May 1, 2001)
107
108
Independent Auditor’s report
Independent Auditor’s report
We have audited the annual financial statements, together with the bookkeeping system, of the Company
Landesbank Schleswig-Holstein Girozentrale, Kiel, as
well as the consolidated financial statements and its
report on the position of the Company and the Group
prepared by the Company for the business year from
January 1, 2001, to December 31, 2001. The preparation
of these documents in accordance with German commercial law and supplementary provisions in the statute
is the responsibility of the Company’s management. Our
responsibility is to express an opinion on the annual
financial statements, together with the bookkeeping
system, as well as on the consolidated financial statements and the report on the position of the Company
and the Group, based on our audit.
We conducted our audit of the annual and consolidated
financial statements in accordance with § 317 HGB
(Handelsgesetzbuch, German Commercial Code) and
German generally accepted standards for the audit of
financial statements promulgated by the Institut der
Wirtschaftsprüfer. Those standards require that we plan
and perform the audit such that misstatements materially affecting the presentation of the net assets, financial
position and results of operations in the annual and the
consolidated financial statements in accordance with
principles of proper accounting and in the report on
the position of the Company and the Group are detected with reasonable assurance. Knowledge of the
business activities and the economic and legal environment of the Company and the Group and evaluations of
possible misstatements are taken into account in the
determination of audit procedures. The effectiveness of
the accounting-related internal control system and the
evidence supporting the disclosures in the books and
records, the annual and consolidated financial statements and the report on the position of the Company
and the Group are examined primarily on a test basis
within the framework of the audit. The audit includes
assessing the accounting and consolidation principles
used and significant estimates made by management, as
well as evaluating the overall presentation of the annual
and consolidated financial statements and the report on
the position of the Company and the Group. We believe
that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion, the annual and the consolidated financial
statements give a true and fair view of the net assets,
financial position and results of operations of the
Company and the Group, respectively, in accordance
with principles of proper accounting. On the whole the
report on the position of the Company and the Group
provides a suitable understanding of the Company’s and
the Group’s position and suitably presents the risks of
future development.
Kiel, April 22, 2002
Wollert-Elmendorff
Deutsche Industrie-Treuhand GmbH
Wirtschaftsprüfungsgesellschaft
Dr. Göttgens
Wirtschaftsprüfer
(German Public Auditor)
Hammelstein
Wirtschaftsprüfer
(German Public Auditor)
as at April 1, 2002
Chairman
Communication / Economics
Board Advisory
Legal Department
Internal Auditing
Personnel
Controlling
Taxes
Hans Berger
Deputy Chairman
Information Systems /Organization
Transaction Services / Middle Office
Ship Financing
Savings Banks /Public-sector Clients
Copenhagen Branch (Operations and IT)
Dieter Pfisterer
Services
Corporates
Credit Office
Real Estate Banking
Schleswig-Holsteinische Kapital-Beteiligungsgesellschaft mbH
Landes-Bausparkasse
FMS Facility Management Service GmbH
Spielbank SH GmbH
Dr. Erwin Sell
Structured Finance
Financial Institutions / Non Core Corporates
LB Kiel Corporate Finance GmbH
Gudme Raaschou
PCA Corporate Finance Oy
Copenhagen Branch (excluding Operations,
IT and Financial Markets)
Private Banking
Capital Markets
Asset Liability Management
Luxembourg Branch
Copenhagen Branch (Financial Markets)
Senior Executive Vice Presidents as at April 1, 2002
Klaus Bernhart
Dieter Heymann
Lutz Koopmann
Benno Mokwinski
109
110
Glossary
Glossary of Balance Sheet Items
Debt Instruments Issued by Public Institutions
and Bills of Exchange Eligible for Refinancing
with Central Banks
These debt instruments bear interest on a discounted
basis. Debt instruments issued by public institutions
that do not meet the requirements of this item are
reported within item 5 a) aa) of the balance sheet, if
they qualify for listing on a stock exchange, and otherwise within item 4.
ties, special purpose associations of municipalities and
counties, and other entities and associations established
under public law (Anstalten und Körperschaften) and to
member states of the European Union and their territorial subdivisions meeting certain requirements, and
loans guaranteed by such entities. Such loans may be
used as cover for municipal bonds issued by LB Kiel
(Kommunalobligationen, öffentliche Pfandbriefe or
public sector Pfandbriefe). Loans used as cover for
Pfandbriefe remain on the issuer’s balance sheet.
Treasury Bills and Discounted Treasury Notes
Discounted treasury notes are short-term and mediumterm notes with a maturity of no longer than two
years, issued by federal or state governments of
Germany or foreign governments. These notes usually
do not bear interest but are sold on a discounted basis
like drafts.
Treasury bills are drafts drawn by federal or state
governments of Germany or foreign governments.
Treasury bills are sold on a discounted basis.
Loans and Advances to Banks
This item includes all amounts due from German and
non-German banks, unless the obligations are bills of
exchange (drafts) meeting the requirements of item
2 b) or bonds and other fixed-income securities that
qualify for listing on a stock exchange (reported within
item 5 b) bb)).
Loans and Advances to Customers
This item includes all amounts due from customers that
are not banks, unless the obligations are bills of exchange (drafts) meeting the requirements of item 2 b) or
bonds and other fixed-income securities that qualify for
listing on a stock exchange (reported within item 5).
Item 4 includes mortgage-secured loans (Hypothekendarlehen) granted by LB Kiel that meet certain
requirements of the Mortgage Bank Act (Hypothekenbankgesetz). Such loans may be used as cover for
mortgage bonds issued by LB Kiel (Hypothekenpfandbriefe or mortgage Pfandbriefe). Item 4 also includes
municipal loans organized under public law (Kommunalkredite). These are loans, e. g., to municipalities, coun-
Bonds and other Fixed-Income Securities
This item includes fixed-income securities that are
qualified for listing on a stock exchange, such as bearer
securities, negotiable securities that are part of an
offering, bills of exchange and discounted notes of
public authorities that do not meet the conditions of
item 2 a) and other money market instruments.
Refinancing with Deutsche Bundesbank
Bonds that are eligible (for refinancing) for marginal
lending facilities from Deutsche Bundesbank must be
presented separately on the balance sheet even if they
are already serving as collateral for other obligations.
Eligible securities are set forth on a list of securities
eligible as collateral maintained by Deutsche Bundesbank. Marginal lending facilities are overnight loans
extended by Deutsche Bundesbank to banks that are
secured by collateral and usually bear interest at the
rate of the marginal lending facility of the European
Central Bank.
Own Bonds
This item consists of securities of a type qualified for
listing on a stock exchange that were issued by LB Kiel
in a public offering and repurchased by LB Kiel later.
Securities issued by LB Kiel that do not qualify for
listing on a stock exchange and that were repurchased
by LB Kiel are deducted from item 4 a) on the liabilities
side of the balance sheet.
Glossary
Shares and other Non-Fixed Income Securities
This item includes shares that are not contained in item
7, 8 (LB Kiel Group Balance Sheet) or 9. It also includes
profit-sharing rights (Genussrechte) that are bearer or
negotiable instruments and that qualify for listing on a
stock exchange, and all other non-fixed income securities that are listed on a stock exchange.
Equity Investments in Non-Affiliated Companies;
Equity Investments in Affiliated Companies
An “equity investment” (Beteiligung) as defined in sec.
271 (1) of the German Commercial Code is a direct or
indirect equity investment in another enterprise that
LB Kiel intends to hold on a long-term basis in order
to establish a permanent relationship that contributes
to its own business. Equity interests of 20 % or more
are subject to a rebuttable presumption that they are
equity investments (Beteiligungen).
“Affiliated companies” (verbundene Unternehmen)
within the meaning of sec. 271 (2) of the German
Commercial Code are companies (i) that are wholly or
more than 50 %-owned, or otherwise controlled, by LB
Kiel, (ii) LB Kiel’s interest in which is characterized as
an equity investment (Beteiligung), and (iii) which must
be fully consolidated with LB Kiel in accordance with
sec. 290 of the German Commercial Code. Thus, LB
Kiel’s investment in all affiliated companies are equity
investments (Beteiligungen).
An equity investment (Beteiligung) can be an investment (i) in an affiliated company or (ii) a company that
is not an affiliated company, if the conditions of sec. 271
(1) of the German Commercial Code are met. Item 7
refers to equity investments in companies that are not
affiliated companies, whereas item 8 refers to equity
investments in affiliated companies.
Companies in which a company owns at least 20 %
of the capital must also be listed pursuant to sec. 285
No. 11 of the German Commercial Code in the Notes
to Annual Accounts required by the German Commercial Code. Such Notes indicate which of the companies
listed pursuant to sec. 285 No. 11 of the German
Commercial Code are affiliated companies.
Trust Assets ; Trust Liabilities
The major portion of “trust assets” and “trust liabilities” consists of fiduciary loans that are loans granted
by LB Kiel in LB Kiel’s name but on behalf of other
entities with funds entirely supplied by, and for a purpose and on terms specified by, such other entities.
LB Kiel has a liability only for its duties as trustee of
the other entities’ funds and bears no credit risks with
respect to fiduciary loans.
Deferred Income and Prepaid Expenses
This item reflects the fact that the balance sheet must
show all transactions which result in receipts or payments irrespective of whether these amounts become
effective as income or expenses in the year of the
transaction or the following years. Prepaid expenses
represent payments that have to be recognized in the
statement of income after the present balance sheet
date. Deferred income represents receipts that become
income at a certain time after the present balance
sheet date.
Deferred Taxation
Sec. 274 (1) of the German Commercial Code: If the
tax expenses attributable to the fiscal year or earlier
fiscal years are too low because taxable income under
the tax regulations is lower than the results reported in
the financial statements, and if such lower tax expenses
of the fiscal year or earlier fiscal years will probably be
equalized in later fiscal years, an accrual shall be set up
pursuant to sec. 249 (1), sentence 1 (German commercial code), in the amount of the probable tax charge of
the later years and shall be reported separately on the
balance sheet or in the notes. The accrual shall be
written back as soon as the higher tax charge occurs
or is no longer likely to arise.
111
112
Glossary
Sec. 274 (2) of the German Commercial Code: If the
tax expenses attributable to the fiscal year or earlier
fiscal years are too high because taxable income under
the tax regulations is higher than the results reported
in the financial statements, and if the excessive tax
charge of the fiscal year or earlier fiscal years will
probably be equalized in later fiscal years, a prepaid
expense may be reported as an accounting convenience
on the assets side of the balance sheet in the amount
of the probable tax relief in the following fiscal years.
This item is to be reported separately with an appropriate description and explained in the notes. If such an
item is reported, profits may only be distributed, if after
the distribution the freely available earnings reserves
plus retained earnings less accumulated losses brought
forward at least equal the amount capitalized. The
amount shall be eliminated as soon as the tax relief
occurs or is no longer likely to arise.
Liabilities to Banks
This item includes all kinds of liabilities to German and
non-German banks, unless the liabilities are certificated
liabilities (reported within item 4).
Liabilities to Customers
This item includes all kinds of liabilities to German and
non-German customers other than banks, unless these
obligations are certificated liabilities (item 4).
Certificated Liabilities
Certificated liabilities are debt obligations that are
evidenced by a transferable certificate other than a
certificate registered in the name of the holder. “Bonds
issued” are bearer bonds and negotiable bonds that are
part of an offering, in each case irrespective of whether
they qualify for listing on a stock exchange or not.
Securities issued by LB Kiel that do not qualify for
listing on a stock exchange and that were repurchased
by LB Kiel are deducted from item 4 a) on the liabilities
side of the balance sheet. “Money market instruments”
are bearer securities, and negotiable securities that are
part of an offering, irrespective of whether they qualify
for listing on a stock exchange.
Special Reserve Item
This item represents the reserves pursuant to sec. 6 b
of the German Income Tax Act (Einkommensteuergesetz). sec. 6 b (1), German Income Tax Act provides for
two options to treat undisclosed reserves (excess of
actual value over book value) in connection with certain fixed assets (inter alia real estate and buildings)
which are disclosed when such assets are disposed of.
First, the cost of acquisition or manufacturing of such
assets as defined in sec. 6 b (1), sentence 2, Income
Tax Act may be reduced by up to 100 percent of the
profit resulting from the disposition of such assets if
the assets have been acquired or manufactured in the
business year (Geschäftsjahr) of the sale or in the
preceding business year. Second, instead of such reduction, a pre-tax reserve may be set up to be released in
the following 4 to 6 years to reduce the cost of acquisition or manufacture of the same kind of assets. After
such period, the remaining reserves, if any, must be
written back to income.
Subordinated Debt
Long-term subordinated debt of a bank is part of the
bank’s Liable Capital (Supplementary Capital) if it meets
certain requirements established by the German Banking Act, principally:
(i) it has been agreed that such debt shall not be
repaid in the case of insolvency proceedings involving
the assets of the bank or in the case of the liquidation
of the bank before all non-subordinated creditors of
the bank have been satisfied;
Glossary
(ii) such debt has been made available to the bank
for a period of at least five years (the 5-years period
does not apply, if (x) the bank has reserved the right to
early redemption if a change in tax law results in the
payment of additional interest or (y) the capital is
replaced by other Liable Capital of at least equal ranking); and
(iii) any right to set-off the repayment obligation
relating to the debt against claims of the bank is excluded and the debt is not secured or guaranteed by the
bank or a third party.
Profit-Sharing Rights
Capital paid in consideration of profit-sharing rights
(Genussrechte) meeting certain conditions set forth in
the German Banking Act, including the requirements
that it be subordinated to all other creditors and
participate in the bank’s losses. Capital paid in consideration of Genussrechte is part of a bank’s Liable
Capital (Supplementary Capital) if it meets certain
requirements established by the German Banking Act,
principally:
(i) such capital participates in any loss incurred by
the bank up to the full principal amount of the profitsharing rights, and the bank has the right to postpone
interest payments in the case of a loss;
(ii) it has been agreed that such capital shall not be
repaid in the case of insolvency proceedings involving
the assets of the bank or in the case of the liquidation
of the bank before all non-subordinated creditors of
the bank have been satisfied;
(iii) such capital has been made available to the bank
for a period of at least five years (the 5-year period
does not apply, if (x) the bank has reserved the right to
early redemption if a change in tax law results in the
payment of additional interest or (y) the capital is
replaced by other Liable Capital of at least equal
ranking;
(iv) repayment of such capital does not become due,
or under the terms of the profit participations agreement cannot become due, within a period of less than
two years; and
(v) the agreement relating to the profit-sharing rights
does not contain a provision pursuant to which any
reductions in the repayment obligation arising from
losses suffered during the term of the profit-sharing
rights are to be compensated from profits which arise
after more than four years following the due date of
the repayment obligations.
Fund for General Banking Risks
Under sec. 340 g of the German Commercial Code,
banks may carry a special item called “Fund for General
Banking Risks” (Sonderposten für allgemeine Bankrisiken) on the liabilities side of their balance sheet for
protection against general banking risks. However, such
a fund may only be established if, in accordance with
reasonable commercial judgment, the special risks
inherent in the business of banks require the establishment of such a fund. Any additions to the Fund for
General Banking Risks or any profits derived from its
dissolution must be reflected separately in the bank’s
statement of income. Funds for General Banking Risks
pursuant to sec. 340 g of the German Commercial
Code are qualified as core capital.
113
Our Commitment to Society and the Region
Our Commitment to
Society and the Region
Our strong commitment to society and the region is reflected in our
sponsorship of the Schleswig-Holstein Music Festival and the Multimedia Campus Kiel, our own Art Foundation, as well as numerous
social, environmental and climate protection initiatives. All these
activities are an expression of our strong roots in Schleswig-Holstein,
where we have operated as a bank for over eighty years.
Main Sponsor of the Schleswig-Holstein
Music Festival
Since 1994, LB Kiel and its partners in the S-Finance
Group have been the main sponsors of the SchleswigHolstein Music Festival, dedicating an annual amount of
€ 830,000 to the event. In 2002, the agreement was
renewed for another three years. One of the biggest
and most renowned classical music festivals of its kind
in Europe, the Schleswig-Holstein Music Festival is a
significant asset to the image and the economy of
Schleswig-Holstein.
In line with the key theme of the event, LB Kiel and
its partners additionally support young musicians with
the “Förderpreis der Sparkassen-Finanzgruppe”. Presented for the second time in 2001, the € 5,000 talent award
goes to musicians up to the age of 24.
Education for the Future – Multimedia Campus Kiel
LB Kiel has dedicated over € 510,000 to the Multimedia
Campus Kiel, a project operated jointly by universities
and the corporate sector. The Multimedia Campus
trains IT and multimedia experts, for whom there is
high demand in the corporate sector. Our sponsorship
of the Multimedia Campus effectively strengthens
Schleswig-Holstein’s position as an important economic
and technological centre.
Arts and Cultural Sponsor
LB Kiel’s Art Foundation promotes contemporary fine
arts and culture in Schleswig-Holstein. 2001 was the
year of modern dance, with Juliane Rößler, Director of
Tanz Companie Lübeck, elected curator. Under the title
of “Tanzmontage”, she presented dance performances
of different styles during a period of six months.
Outstanding cultural achievements in Germany’s
northernmost federal state are honoured by the “kultur
aktuell” prize awarded by LB Kiel in cooperation with
the Schleswig-Holstein Cultural Association. In 2001,
the € 5,000 prize went to the Liliencron professorship
in Kiel, which is the only professorship of lyrics in
Germany.
Social Commitment: Foundation for Remembrance
LB Kiel’s social commitment is reflected in a large
number of different activities such as the “Citizens’
Foundation for Memorials in Schleswig-Holstein”, which
we initiated together with the State of SchleswigHolstein. The new foundation is to provide a solid
financial basis for memorials dedicated to the victims of
the Nazi regime.
Climate Protection – LB Kiel operates CO2 neutral
LB Kiel has reached its ambitious target of CO2 neutral
operation. This was made possible, on the one hand, by
the consistent reduction of our energy consumption:
On the other hand, the remaining CO2 emissions of
approx. 8,000 tons per year were compensated for by
environmental protection activities in SchleswigHolstein. New woodlands were planted at 123 sites on
a total area of 889 hectares. Moreover, we were involved in the rehabilitation of two 422 ha marshland sites.
With the above projects absorbing some 9,000 tons of
CO2 per year, LB Kiel has compensated for its remaining
CO2 emissions, so that its operation is CO 2 neutral.
Our activities are supported by the “Prima Klima –
weltweit” (“Great Climate – worldwide”) association.
115
116
Addresses
Addresses
Girozentrale Kiel
Postfach 11 22, 24100 Kiel
Martensdamm 6, 24103 Kiel
Phone: (00 49) 431 900 - 01
Fax: (00 49) 431 900 - 24 46
Telegramm: Landesbank Kiel
Telex: 292822 gzki d
T-Online: * 23230 #
Internet: http://www.lb-kiel.de
E-mail: info@lb-kiel.de
Lübeck Branch
Postfach 19 04, 23507 Lübeck
Breite Straße 36 – 40, 23552 Lübeck
Phone: (00 49) 451 70 35 - 0
Fax: (00 49) 451 70 35 - 51 19
Telegramm: Landesbank Lübeck
T-Online: * 23230 #
Berlin Representative Office
Kurfürstendamm 45, 10719 Berlin
Phone: (00 49) 30 88 57 36 - 0
Real Estate Finance /Corporates national
Fax: (00 49) 30 88 57 36 - 53 53
Hamburg Representative Office
Lilienstraße 3, 20095 Hamburg
Phone: (00 49) 40 32 56 22 - 0
Real Estate Finance
Fax: (00 49) 40 32 56 22 - 54 16
Asset Management
Fax: (00 49) 40 32 56 22 - 54 15
LB Kiel Corporate Finance GmbH
Gartenstr. 9, 24103 Kiel
Phone: (00 49) 431 900 - 56 01
Fax: (00 49) 431 900 - 56 49
Landes-Bausparkasse Schleswig-Holstein
Wellseedamm 14, 24145 Kiel
Phone: (00 49) 431 900 - 04, Fax: (00 49) 431 900 - 46 78
Telegramm: Landesbank Kiel
Internet: http://www.LBS-SCHLESWIGHOLSTEIN.de
E-mail: Info@LBS-SH.de
LBS Immobilien GmbH
Wellseedamm 14, 24145 Kiel
Phone: (00 49) 431 900 - 45 72 /45 73
Fax: (00 49) 431 900 - 45 89
E-mail: LBS-ImmoSchleswigHolstein@t-online.de
Central division of Landesbank
Schleswig-Holstein Girozentrale
Fleethörn 29 – 31, 24103 Kiel
Phone: (00 49) 431 900 - 03
Fax: (00 49) 431 900 - 33 83
Internet: http://www.ibank-sh.de
E-mail: info@ibank-sh.de
Schleswig-Holsteinische
Kapital-Beteiligungsgesellschaft mbH
Office: Gartenstr. 9
Phone: (00 49) 431 900 - 56 50
Fax: (00 49) 431 900 - 56 99
LB Kiel Unternehmensbeteiligungsgesellschaft mbH
Office: Gartenstr. 9
Phone: (00 49) 431 900 - 56 50
Fax: (00 49) 48 77 900 - 56 99
Copenhagen Branch
Kalvebod Brygge 39 – 41, DK -1560 Copenhagen V
Phone: (00 45) 33 44 99 00
Fax: (00 45) 33 44 99 99
Telex: 27 228 kila dk
E-mail: info@lbkiel.dk
Landesbank Schleswig-Holstein Luxembourg Branch
2, rue Jean Monnet, L - 2180 Luxembourg
Phone: (0 03 52) 42 41 37
Fax: (0 03 52) 42 41 41 - 330
E-mail: info@lb-kiel.lu
Addresses
2, rue Jean Monnet, L - 2180 Luxembourg
Phone: (0 03 52) 42 41 41 - 1
Fax: (0 03 52) 42 41 96/97
E-mail: Info@lbsh-int.com
LB Schleswig-Holstein Finance B.V.
Strawinskylaan 31 11, 6th floor,
NL -1077 ZX Amsterdam
Phone: (00 31) 2 04 42 - 11 18
Fax: (00 31) 2 04 42 -11 19
Telex: (0 44) 1 56 14 altru nl
United Kingdom Representative Office
50 Gresham Street, GB - London EC2V 7AY
Phone: (00 44) 20 76 00 70 60
Fax: (00 44) 20 76 00 70 20
E-mail: oliver.hermanns@lb-kiel.de
Tallinn Representative Office
2 Roosikrantsi Str., EE -10119 Tallinn
Phone: (0 03 72) 6 11 06 70
Fax: (0 03 72) 6 11 06 71
E-mail: info@lbkiel.EE
Stockholm Representative Office
Kungsträdgårdsgatan 10, Box 17 21,
S -11187 Stockholm
Phone: (00 46) 8 54 50 10 70
Fax: (00 46) 8 54 50 10 89
Oslo Representative Office
Klingenberggaten 5, 9 th floor, PB 18 03 Vika,
N - 0123 Oslo
Phone: (00 47) 22 01 57 70
Fax: (00 47) 22 01 57 79
Helsinki Branch
Suolakivenkatu 1, FIN - 00810 Helsinki
Phone: (0 03 58) 97 27 73 98
Fax: (0 03 58) 97 55 36 33
Gudme Raaschou Bankaktieselskab
Kalvebod Brygge 39 – 41, DK - 1560 Copenhagen V
Phone: (00 45) 33 44 90 00
Fax: (00 45) 33 44 90 01
E-mail: info@gr.dk
Gudme Raaschou
Stockholm Representative Office
S -11187 Stockholm
Phone: (00 46) 8 54 50 10 83
Fax: (00 46) 8 54 50 10 89
E-mail: lej@gr.dk
LB Kiel Nordic Finance AB
S -11187 Stockholm
Phone: (00 46) 8 54 50 10 70
Fax: (00 46) 8 54 50 10 89
E-mail: mfl@lbkiel.dk
Södergatan 16, S - 21134 Malmö
Phone: (00 46) 40 30 63 10
Fax: (00 46) 40 30 63 12
E-mail: gug@lbkiel.dk
PCA Corporate Finance Oy
Eteläranta 12
FIN - 00130 Helsinki
Phone: (0 03 58) 9 61 33 44 00
Fax: (0 03 58) 9 61 33 44 55
E-mail: marja.villberg@pca.fi
117
118
Editorial Information
Publications
Among the many publications of LB Kiel, in German and in
English, is the “LB Kiel Report”, which includes analyses and forecasts on the economic situation (Euroland, Baltic Sea Region,
USA) and the capital market as well as products and services of
the Bank.
Contacts /Orders
If you have any questions regarding the Annual Report,
please contact our Investor Relations team:
LB Kiel
Communication /Economics
Martensdamm 6
24103 Kiel
Phone: ( 00 49) 431 900 -14 81
Fax: (00 49) 431 900 -14 98
E-mail: investor.relations@lb-kiel.de
If you are interested in further copies of our
Annual Report or the LB Kiel Report, please contact:
LB Kiel
Martensdamm 6
24103 Kiel
Phone: ( 00 49) 431 900 -14 70
Fax: (00 49) 431 900 -14 98
E-mail: presse@lb-kiel.de
Editorial information
Publisher
LB Kiel
Landesbank Schleswig-Holstein Girozentrale
E-mail: presse@lb-kiel.de
Photos
Thomas Hoffmann (cover, 48, 56), Focus (4-5, 58),
Ifa-Bilderteam (7), Zefa (8, 54), Andreas Fechner (11),
Mauritius (38),Visum (44, 50), Bernd Perlbach (114)
Design /Consultancy
LB Kiel
Marketing
Picture consultancy
Dietmar Suchalla (Magazine Factory), Hamburg
Layout
diekoordinaten GbR,
Designagentur für klassische und neue Medien, Kiel
Printers
G+D Grafik + Druck GmbH & Co KG, Kiel
Our Annual Report on the Internet
http://www.lb-kiel.de
The Annual Report is also available in German.
Helsinki
Oslo
Stockholm
Copenhagen
Kiel
Lübeck
Hamburg
London
Berlin
Luxembourg
Tallinn

LB Kiel – Bank for the North

Transcription

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Annual Report 1999