The EBA's recapitalisation plan

 

The EBA's capital requirements calculation was carried out for the DNB Bank Group and showed that the bank has a common equity Tier 1 capital ratio of 7.8 per cent. DNB Bank has had no exposure to Southern European sovereign debt, and the test thus gave no reduction in Tier 1 capital. The bank will need approximately NOK 12 billion to meet the 9 per cent requirement. These funds are available through the holding company and will be transferred to the bank through an increase in equity during the fourth quarter of 2011 and by retaining profits in the bank. The DNB Bank Group will thus pass the stress test and meet the authorities' requirements.

The Norwegian implementation of the EBA requirements differs from the implementation in Sweden in the following key areas:

1. Norwegian banks have been tested in accordance with the Basel II transitional rules. The Swedish banks have been tested based on full implementation of Basel II IRB. If DNB Bank had been tested in line with Swedish banks, its common equity Tier 1 capital ratio would have been 8.4 per cent. 2. Based on IRB measurement, DNB Bank probably has generally higher risk weights on its loans than the Swedish banks. A harmonisation of the weights would most likely have given DNB Bank a significantly higher capital adequacy ratio. 3. DNB Bank has not yet received approval from the Financial Supervisory Authority of Norway to use IRB measurement for all credit portfolios for which such approval has been requested. Such approval may result in a further increase in the capital adequacy ratio.

DNB is of the opinion that it is unfortunate that different supervisory regimes in Norway and Sweden give the market divergent impressions of the strength of the two countries' financial systems and hopes that, in the longer term, regulations will become more harmonised. DNB Bank is adequately capitalised today and will loyally meet requirements and instructions which will be introduced in the future, while seeking to ensure controlled growth and pursuing a prudent dividend policy.   

This information is subject to the disclosure requirements according to Section 5-12 of the Norwegian Securities Trading Act.

Contact person for analysts:
Per Sagbakken, head of IR/Long-term Funding, tel.: +47 90 66 11 59
Contact persons for the press:
Bjørn Erik Næss, CFO, tel.: +47 41 50 52 01
Trond Bentestuen, group executive vice president, Corporate Communications, tel.: +47 95 02 84 48