The state of Hessen is bolstering the equity of Landesbank Hessen-Thüringen (Helaba) by 2 billion euros. As a result, the state's share in Helaba will nearly quadruple, rising from 8.1% to 30.1%, as announced by the Hessian Ministry of Finance. The shareholding of the savings banks will decrease, and the stake owned by the state of Thuringia will decrease from 4.1% to 3.5%.

With this capital measure, the state is responding to regulatory demands, since of the state's silent participation can no longer count as core capital. This question was addressed during a Europe-wide examination of banks' capital structures by the European Banking Authority (EBA).

The Hessian state government now plans a 1.5 billion euro cash injection for common shares, plus a 500 million euro AT1 bond issuance. „Helaba will be even stronger than it is now“, explained Hessian Finance Minister Alexander Lorz (CDU) in Wiesbaden. „With the new, non-earmarked capital, it can develop even better.“ At Helaba, there is satisfaction that a good solution has been found together with shareholders.

A supplementary state budget is necessary for financing the amount. It is planned that the state parliament will approve the plan before the summer recess. „As a valuable investment acquisition, borrowing is compatible with the debt brake“, a statement said.

For several decades, two billion-euro funding programmes have been contributed as silent participations. In exchange for the capital injection, the state will get these funding programmes back from Helaba. As Lorz explains, "since Hessen receives dividends and interest for its participation in Helaba, this investment pays for itself.“

However Criticism came from the opposition FDP in the Hessian state parliament. Member of Parliament Marion Schardt-Sauer accused the state government of discussing the plans behind closed doors. „Now the Finance Minister finally admits that the state wants to inject 2 billion euros“, said the budgetary spokeswoman. „But Alexander Lorz does not explain what alternative options there might have been, and whether the risks were carefully weighed.“

Hessen is not the only federal state facing a capital problem with its state bank. BayernLB also has part of its equity consisting of a silent participations from the Free State of Bavaria, which is slated to be transformed into a genuine capital reserve, qualifying as core capital.