Landeskreditbank Baden-Württemberg - L-Bank

ank, and the aggregate nominal value of all such Qualified Participations may not exceed 60% of such bank’s
Liable Capital. With the approval of the BaFin, a bank may exceed the 15% and 60% limitation on investments if
it covers the Qualified Participations in excess of these limits by Liable Capital. If both limitations are exceeded,
the larger of both excess amounts must be covered by Liable Capital. “Qualified Participation” is defined in the
German Banking Act as a (1) direct or indirect investment in at least 10% of the capital or the voting rights of the
target enterprise or (2) the ability to exercise a significant influence over the management of the target enterprise.
An investment is indirect not only when it is made by one or more subsidiaries but also when it is made by an
enterprise with a “similar relationship”. All of the shares of an enterprise which the bank owns indirectly through
one or more subsidiaries are fully attributed to the bank.
Policies on Trading Activities
Pursuant to a 1995 release of the predecessor of the BaFin, German banks must observe minimum
requirements with respect to transactions relating to money market activities, securities, foreign exchange,
precious metals and derivatives. The release stresses the responsibility of senior management for the proper
organization and monitoring of trading and sales activities, requires that banks adopt written policies regarding
such activities, imposes specific requirements with respect to activities in new products and deals with the
qualifications and remuneration of trading and sales staff, record retention, risk controlling and management and
the internal organization of trading, sales, settlement and accounting.
Reporting Requirements
In order to enable the BaFin and the Bundesbank to monitor compliance with the German Banking Act and
other applicable legal requirements and to obtain information on the financial condition of the German banks, the
BaFin and the Bundesbank require the periodic filing of information.
Each bank must file with the BaFin or the Bundesbank, or both, among other things, the following
information:
(1) immediate notice of certain organizational changes, the extension or increase of large credits, the
acquisition or disposal of 10% or more of the equity of another company or certain changes in the
amount of such equity investment, and the commencement or termination of certain non-banking
activities;
(2) monthly balance sheet and statistical information and annual audited unconsolidated and consolidated
financial statements;
(3) the acquisition or disposal of a Substantial Participation, or an increase or decrease of a Substantial
Participation which results in the investment reaching or passing the threshold of 20%, 33% or 50% of
such voting rights or capital, as well as the fact that the bank became or ceased to be a subsidiary of
another enterprise, if the bank has knowledge of such facts; and on an annual basis, the names and
addresses of holders of Substantial Participations in the bank and its foreign subsidiary banks, and the
amount of such investment if the bank has knowledge of such facts (the definition of “Substantial
Participation” is substantially identical to the definition of Qualified Participation, as set forth above);
(4) monthly compliance statements with regard to the capital adequacy rules and the requirements on
liquidity and statements on certain foreign lending; and
(5) quarterly statements listing the borrowers to whom the reporting bank has outstanding loans of EUR
1.5 million or more and certain information about the amount and the type of the loan, including
syndicated loans exceeding this amount even if the reporting bank’s share does not reach EUR 1.5
million.
If several banks report to the Bundesbank loans of EUR 1.5 million or more to the same borrower, the
Bundesbank must inform the reporting banks of the total reported indebtedness and of the type of such
indebtedness of such borrower and of the number of reporting lending banks.
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