The Oldenburgische Landesbank is getting ready for the stock market and is also examining further options for acquisitions.

OLB, which has been owned by the three financial investors Apollo (36 percent), Grovepoint and the Texas teacher pension system (both 32 percent) since 2017, prepared its balance sheet for the first half of 2022 in accordance with the IFRS accounting rules, which is an important prerequisite for a IPO accomplished.

“With this balance sheet according to IFRS, we have done our homework.

Whether and when we go public is up to our owners," said CEO Stefan Barth and CFO Rainer Polster on the occasion of the announcement of the half-year figures in an interview with the FAZ

Hanno Mussler

Editor in Business.

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Although the preparations for an IPO often paralyze companies, this does not seem to be the case for OLB.

Most recently, OLB was named as an interested party for Degussa Bank, which was put up for sale by the owners of Warburg-Bank, Christian Olearius and Max Warburg.

"We are open to acquisitions and have the confidence to quickly integrate a purchase and leverage the cost advantages," says Barth, without going into detail about Degussa Bank.

Formed from four banks

This self-confidence is based on the fact that OLB has been formed from four banks since 2018: Oldenburgische Landesbank, which temporarily belonged to Allianz, Bremer Kreditbank, Bankhaus Neelmeyer and Wüstenrot Bank AG Pfandbriefbank.

All four banks merged and - which is by no means a matter of course after bank mergers - are now running on a core bank IT system.

"Restructuring has to happen quickly, otherwise you lose focus," says Barth and praises the owners for making clear, fact-based decisions.

A decision on an IPO in the fourth quarter of 2022 or in the spring of 2023 could also be made quickly, even if the capital market is currently too weak and volatile for this.

OLB, which has total assets of EUR 25 billion, last proved its ability to act in June 2022 when, together with the Dutch insurance company ASR, it acquired a EUR 500 million portfolio from the Dutch bank NIBC, with which the bank mainly financed company acquisitions from financial investors.

"In the acquisition financing of medium-sized companies, we are now number one in Germany and among the top three in the Benelux region," says Barth.

In addition, OLB conducts traditional lending business and real estate financing business with corporate customers;

Strong half-year figures

For the planned IPO, OLB clearly wants to score with good business figures.

In the first half of 2022, with 615,000 private and 5,000 corporate customers, it earned 99.7 million euros after taxes, a strong 63 percent more than in the first half of 2021. The return on equity after taxes thus rose to a very good 15.3 percent.

Operating income climbed by 16 percent, costs fell by almost 18 percent, also due to a reduction in the branch network to 40 locations in the core area of ​​Weser-Ems (Northwest Germany) and a reduction in staff from 1,760 to 1,337 in twelve months.

“There was not a single lawsuit against this, we managed to downsize in a socially responsible manner with early retirement and voluntary programs.

I am confident that we will reach the goal of 1250 employee capacities by the end of the year",

Only trimmed for a short time?

At the same time, the question arises as to whether OLB can also permanently achieve the goal of a return on equity of 13 to 15 percent and a cost/income ratio of 40 (currently 42) or whether it will only be trimmed for efficiency by the owners in the short term.

Barth refers to the private customer business, in which, in addition to the 40 regional branches, a central consulting center was created in Oldenburg with around 200 employees, which looks after around 400,000 private customers nationwide, who are supplied to the OLB by digital platforms and intermediaries of the financial group Wüstenrot and Württembergische, among others.

“This year we have significantly improved accessibility in the advice center.

We have an availability rate of around 95 percent, and around 70 percent of all telephone calls are answered within 20 seconds on the hotline.

CFO Polster also considers concerns that the owners could exhaust OLB with high dividend payments in the short term to be unfounded.

"We are aiming for a common equity tier 1 ratio of at least 12.25 percent," says Polster.

In the 2020 and 2021 financial years, OLB paid 30 to 40 percent of its profits in dividends.

"In the medium term, the payout ratio should increase to 50 percent, but the target for the core capital ratio has priority," the CFO clarifies.

Both the cost-income ratio of currently 42 and the core capital ratio of 12.2 percent are still a touch away from the targets.

In addition, the environment is getting rougher.

At the end of the first half of the year, OLB set aside EUR 3.6 million for loans at risk of default, after releasing risk provisions made during the corona pandemic in the previous year.