Landwirtschaftliche Rentenbank

BANKING
JULY 10, 2015
Landwirtschaftliche Rentenbank
COMPANY PROFILE
Frankfurt am Main, Germany
Company Overview
Table of Contents:
COMPANY OVERVIEW
FINANCIAL HIGHLIGHTS (AS REPORTED)
BUSINESS ACTIVITIES
DISTRIBUTION CAPACITY AND MARKET
SHARE
OWNERSHIP AND STRUCTURE
Subsidiaries
COMPANY MANAGEMENT
COMPANY HISTORY
PEER GROUP
RELATED WEBSITES AND INFORMATION
SOURCES
MOODY’S RELATED RESEARCH
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Landwirtschaftliche Rentenbank (Rentenbank) is a Frankfurt-based bank that serves as a
development agency in the Federal Republic of Germany (FRG). As of 31 December 2014, it had a
consolidated asset base of €88.8 billion.
Rentenbank specialises in the promotion of agricultural business. The bank mainly provides loans
and other types of financing for the German agriculture, forestry, wine growing and horticulture
sectors, as well as the aquaculture and fish farming sectors. It also provides funds for projects in
the food industry and other upstream and downstream companies, as well as investments in
renewable energies and projects for rural development. The bank’s activities are limited to
countries in the European Union (EU) and the Organisation for Economic Co-operation and
Development (OECD).
Analyst Contacts:
FRANKFURT
+49.69.70730.700
Andrea Wehmeier
+49.69.70730.782
Vice President – Senior Analyst
[email protected]
Carola Schuler
+49.69.70730.766
Managing Director – Banking
[email protected]
The bank’s products and services include traditional loans to and the purchase of debt securities
issued by German public sector and private sector banks or federal states, as well as banks in the
European Union and Norway, which are active in the financing of the agricultural sector.
Rentenbank was established in 1949 by statute as the principal development agency servicing the
agriculture, forestry, fishing and food industries in Germany. The bank has no shareholders but is
under legal supervision of the German federal government. On 4 November 2014, the European
Central Bank (ECB) has taken over banking supervision from the Federal Financial Supervisory
Authority (BaFin).
Source: Company Reports (annual report Dec 2014, annual report on form 18-K Dec 2014), Company data, Moody’s
research
This report, exclusively provided to you by
Moody’s, presents a convenient summary of
as reported, publicly available information.
The information is not adjusted for Moody’s
analytic purposes. For Moody’s Ratings,
Opinion and Analytics on this company,
please [Click here]. To access the latest
Moody's Credit Opinion on this company,
please [Click here].
BANKING
Financial Highlights (as Reported)
Note: The financials presented below are those reported by the entity and are not adjusted for Moody’s analytic
purposes. For Moody’s generated ratios on Landwirtschaftliche Rentenbank, please see <Landwirtschaftliche
Rentenbank page on moodys.com>.
EXHIBIT 1
Latest Full-Year Results
Landwirtschaftliche Rentenbank
(in € Million)
31-Dec-14
31-Dec-13
31-Dec-12
% Change
14/13
Total Assets
88,846
81,932
88,398
8.44
(7.31)
3,307
3,194
2,503
3.54
27.64
–
–
–
–
–
Total Regulatory Capital
3,458
3,963
3,758
N/M
5.46
Tier 1 Ratio (%)
16.40
23.90
21.90
N/M
200 bps
60
460
244
(86.87)
88.68
–
–
–
–
–
Total Shareholders’ Equity
Shareholders’ Equity excluding Minority Interest
Net Income
Net Income Attributable to Equity Holders
% Change
13/12
Notes: 1) Based on consolidated financial data.
2) “Shareholders’ Equity excluding Minority Interest” and “Net Income Attributable to Equity Holders” are not applicable to the bank.
3) “Total Regulatory Capital” and “Tier 1 Ratio” for Dec 2014 are calculated in accordance with the Basel III framework, while those for Dec
2013 and Dec 2012 are calculated in accordance with the Basel II framework.
Source: Moody’s research
Business Activities
Rentenbank provides mainly loans and other types of financing to Germany’s agricultural and related
sectors (including forestry, wine growing, horticulture, aquaculture and fish farming), as well as for rural
development and renewable energies. Its products and services include traditional loans to and the purchase
of debt securities issued by German public sector and private sector banks or federal states, other EU
countries and Norway. Moreover, it is permitted to conduct money market and derivative transactions
(derivatives used exclusively as hedging instruments) with banks domiciled in EU and OECD countries.
The bank extends special promotional loans to financial institutions. Such loans are in turn used to provide
loans to borrowers operating in the following sectors in Germany:
This publication does not announce
a credit rating action. For any
credit ratings referenced in this
publication, please see the ratings
tab on the issuer/entity page on
www.moodys.com for the most
updated credit rating action
information and rating history.
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JULY 10, 2015
»
Agriculture, forestry, wine growing, horticulture, aquaculture and fish farming, including borrowers
directly engaged in these sectors, related businesses such as manufacturers and distributors of
machinery, fertilisers and other goods used in farming, forestry and fishing, and commercial and service
businesses with close links to agriculture and forestry
»
Food, including businesses involved in the processing or distribution of food products in all market
segments, such as enterprises engaged in the commodity and luxury food industries and food
wholesale
»
Renewable energy, including businesses involved in the production of power, heat or biomass fuel,
including biogas production. The bank also provides lending for photovoltaic energy or wind farms to
borrowers in the agriculture, forestry, horticulture, fishing and food industries. Since March 2012, this
also includes civic engagement in the production of wind power.
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
»
Rural infrastructure, including lending for activities intended to improve rural infrastructure such as
drinking water treatment and distribution, sewage and waste treatment, land consolidation,
environmental protection, public transportation, housing, and job creation and protection in rural
communities
Rentenbank reports its activities under the following three business segments: Promotional Business, Capital
Investment and Treasury Management. For the financial year ended 31 December 2014 (FYE December
2014), the largest contributor to the bank’s net interest income was the Promotional Business segment. 1
Promotional Business: This segment, which in FYE December 2014 accounted for 59.3% of the bank’s net
interest income, includes the special and standard promotional lending, the securitised lending businesses
(excluding capital investment transactions), and the funding of the bank and its subsidiaries. The
promotional business is primarily conducted with other banks, which pass the loans through to the ultimate
borrowers in the agricultural sector. A small proportion of the bank’s promotional business is conducted
with German federal states. As of 31 December 2014, this segment reported an asset base of €79.5 billion.
Capital Investment: Accounting for 35.1% of the bank’s net interest income in FYE December 2014, this
segment covers the bank’s investment of balance sheet equity and long-term provisions in medium- to
long-term securities, promotional loans and the bank’s direct shareholdings. As of 31 December 2014, this
segment reported an asset base of €3.9 billion.
Treasury Management: This segment includes the results of the bank’s short-term liquidity and short-term
interest rate risk-management activities, covering transactions with a fixed interest period of up to one year,
such as overnight and term deposits, euro commercial papers and floating-rate assets and liabilities
(including swapped positions). As of 31 December 2014, this segment reported an asset base of €5.4 billion,
and accounted for 5.6% of the bank’s net interest income in FYE December 2014.
Source: Company Reports (annual report Dec 2014, annual report on form 18-K Dec 2014), Company data, Moody’s research
EXHIBIT 2
Business Segment
(% of Net Interest Income, consolidated, for FYE December 2014)
Treasury Management
5.6%
Capital Investment
35.1%
Promotional Business
59.3%
Note: “Net interest income” excludes allowance for credit losses/promotional contribution
Source: Company Report (annual report Dec 2014, Pg: 82)
1
3
Throughout this section, net interest income excludes allowance for credit losses/promotional contribution
JULY 10, 2015
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
EXHIBIT 3
Operating Result by Business Segment
(consolidated, in € Million)
FYE December 2012
FYE December 2013
FYE December 2014
160
140
140
126
120
107
110
106
103
100
80
60
52
40
26
12
20
0
Promotional Business
Capital Investment
Treasury Management
Source: Company Reports (annual report Dec 2014, Pg: 82 and Dec 2013, Pg: 80)
EXHIBIT 4
New Business in Promotional Loans and Securitised Lending
(consolidated, in € Billion)
Agriculture
Agribusiness
Renewable Energies
Rural Development
Standard Promotional Loans
Securitised Promotional Business
14
12
10
8
6
4
2
0
2011
2012
2013
2014
Note: Agriculture, Agribusiness, Renewable Energies and Rural Development are considered special promotional loans
Source: Company Report (Investor Presentation April 2015)
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JULY 10, 2015
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
Distribution Capacity and Market Share
Rentenbank, the third-largest development agency in the FRG, operates solely through its head office in
Frankfurt, without a branch network. In order to comply with its obligation not to engage in direct
competition with commercial banks, Rentenbank distributes loans primarily through the eventual
borrower’s house bank. The bank’s business activities are confined to EU countries and OECD countries.
Geographically, the loans and advances of the bank are distributed as follows:
EXHIBIT 5
Landwirtschaftliche Rentenbank
Loans and Advances(%)
Geographical Segment
Germany
Europe (other than Germany)
OECD countries (other than those in Europe)
Total
31-Dec-14
31-Dec-13
96.64
95.98
3.36
4.02
–
–
100.00
100.00
Notes: 1) “Loans and Advances” includes “Loans and advances to banks” and “Loans and advances to customers”
2) OECD countries contributed negligibly to Loans and Advances.
The funds for refinancing of promotional lending are raised through borrowings or the issuance of securities
on domestic and international capital markets. As for the bank’s international funding activities, two of its
major initiatives are the €60 billion Euro Medium-Term Note (EMTN) programme and the €20 billion Euro
Commercial Paper (ECP) programme. In 2014, the Rentenbank’s most important issuance currency was the
US dollar, which accounted for 41% of its issuance volume, followed by the euro (27%) and the Australian
dollar (14%). In 2014, the bank was the third-largest foreign issuer within Australia’s bond market.
Source: Company Reports (annual report Dec 2014), Moody’s research
Ownership and Structure
Although Rentenbank was established as a public law institution, it is not directly owned by the FRG (its
capital was raised by the agricultural and forestry sectors in Germany between 1949 and 1958), and has no
shareholders. However, the German federal government exercises legal supervision through the federal
ministry of food and agriculture, which makes its decisions in concert with the federal ministry of finance.
On 4 November 2014, the ECB took over banking supervision from the BaFin.
In 2013, the German parliament Deutscher Bundestag decided to add an explicit and unconditional
refinancing guarantee of the federal republic to the Governing Law of Landwirtschaftliche Rentenbank,
covering all existing and future obligations of Rentenbank. The explicit government guarantee came into
effect on 1 January 2014 and complements the existing institutional liability support (Anstaltslast).
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JULY 10, 2015
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
The legal principle of Anstaltslast effectively acts as a guarantee by the FRG. According to the terms of this
obligation, the FRG will: (1) safeguard the economic basis of Rentenbank, (2) ensure that it is able to
conduct operations while it remains a statutory body under public law and (3) in the event of financial
difficulties, enable the bank, by financial contribution or other appropriate means, to perform its obligations,
including covering the bank’s securities or guarantee of any securities wherever a substitute obligor has
replaced Rentenbank.
Source: Company Reports (annual report on form 18-K Dec 2014 and Dec 2012), Company data, Moody’s research
Subsidiaries
As of 31 December 2014, Rentenbank held equity interests in the following companies:
EXHIBIT 6
Landwirtschaftliche Rentenbank
Subsidiary
Location
% Held
LR-Beteiligungsgesellschaft mbH
Frankfurt
100.0
DSV Silo- und Verwaltungsgesellschaft mbH
Frankfurt
100.0
Getreide-Import-Gesellschaft mbH
Frankfurt
100.0
Deutsche Bauernsiedlung - Deutsche Gesellschaft für Landentwicklung (DGL) GmbH
Frankfurt
25.1
LAND-DATA Beteiligungs GmbH
Hannover
10.9
LAND-DATA GmbH
Hannover
10.9
Landgesellschaft Mecklenburg-Vorpommern mbH
Leezen
9.8
Niedersächsische Landgesellschaft mbH
Hannover
6.3
Landgesellschaft Sachsen-Anhalt mbH
Magdeburg
5.6
DZ Bank AG Deutsche Zentral-Genossenschaftsbank
Frankfurt
2.9
Landesgesellschaft Schleswig-Holstein mbH
Kiel
3.2
Note: The equity interest in DZ Bank AG Deutsche Zentral-Genossenschaftsbank is held indirectly through LR-Beteiligungsgesellschaft mbH
Source: Company Report (annual report Dec 2014)
Company Management
Board of Managing
Directors
Current Title
Dr. Horst Reinhardt
Rentenbank: Speaker of the Board of Managing Directors;
The Association of German Public Banks (Bundesverband Öffentlicher Banken
Deutschlands, VÖB): Member of the Board of Directors;
VR-LEASING AG, DBB Data Beratungs- und Betreuungsgesellschaft mbH
Steuerberatungsgesellschaft and LAND-DATA Gesellschaft für Verarbeitung
landwirtschaftlicher Daten mbH: Member of the Supervisory Board;
Edmund Rehwinkel-Foundation: Chairman of the Board of Directors;
VÖB-Service GmbH: Member of the Advisory Council;
Frankfurt am Main Chamber of Commerce and Industry: Member of Banking Commission
Rentenbank: Member of the Board of Managing Directors;
BVVG Bodenverwertungs- und -verwaltungs GmbH: Member of the Supervisory Board;
Verbindungsstelle Landwirtschaft-Industrie e.V.: Member of the Board of Directors;
DZ-Bank AG: Member of the Advisory Council
Rentenbank: Member of the Board of Managing Directors
Hans Bernhardt
Imke Ettori
As of 1 Mar 2015
Source: Company Report (annual report Dec 2014), Company data
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JULY 10, 2015
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
Company History
Rentenbank originated in 1923 when Deutsche Rentenbank was created in order to combat hyperinflation.
In 1925, the bank was renamed Deutsche Rentenbank-Kreditanstalt (RKA), and it became the central
refinancing institution for the German agricultural sector. In 1949, Rentenbank was established, with the
same responsibilities as its predecessor RKA.
Rentenbank was established as the principal development agency for the agricultural, forestry, fishing and
food industries in Germany. It is a federal public law institution headquartered in Frankfurt am Main,
operating under the legal supervision of the German federal government and banking supervision of the
ECB.
In October 2014, the ECB completed its comprehensive assessment of 130 European banks. Rentenbank
passed the test, reporting a 2016 Common Equity Tier 1 ratio (CET1 ratio) under the baseline scenario of at
least 16.11% (threshold value: 8.0%), and a 2016 CET1 ratio under the adverse scenario of at least 12.89%
(5.5%).
Source: Company Report (annual report Dec 2014), Company data
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COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
Peer Group
»
Kreditanstalt fuer Wiederaufbau
»
NRW.BANK
»
L-Bank
»
LfA Förderbank Bayern
Related Websites and Information Sources
For additional information, please see:
»
the company’s website: www.rentenbank.de
»
the association of German public banks (VÖB): www.voeb.de
»
the regulator’s website: www.bafin.de, www.bundesbank.de
MOODY’S has provided links or references to third party World Wide Websites or URLs ("Links or References") solely for your
convenience in locating related information and services. The websites reached through these Links or References have not
necessarily been reviewed by MOODY’S, and are maintained by a third party over which MOODY’S exercises no control.
Accordingly, MOODY’S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or
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a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided by any
third party.
Moody’s Related Research
Credit Opinion:
»
Landwirtschaftliche Rentenbank
Accouncement:
»
Germany's adoption of EU BRRD clarifies treatment for grandfathered debt and institutional protection
schemes, November 2014 (314006)
Special Comment:
»
German Development Banks: Strong Public-Sector Support and Legal Framework Underpin Aaa-Aa1
Rating, July 2013 (153231)
Credit Focus:
»
German Development Banks: Peer Comparison, July 2013 (156340)
»
Banking System Outlook:
Germany, November 2014 (177587)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of
this report and that more recent reports may be available. All research may not be available to all clients.
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JULY 10, 2015
COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK
BANKING
Report Number: 182970
Author
Maximilian Denkmann
Andrea Wehmeier
Production Associate
Gita Rajani
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COMPANY PROFILE: LANDWIRTSCHAFTLICHE RENTENBANK