HSH Nordbank has agreed to sell a €1.64bn loan portfolio to financial investors, as the ailing German Landesbank moves to clean up its balance sheet ahead of an EU deadline for privatising itself next year.
The midsized bank — once one of the biggest shipping lenders in the world — had to be rescued in 2009 by the two north German states that own it, after its portfolio of maritime loans turned sour with the onset of the financial crisis.
Last year, the European Commission struck a state aid deal with HSH’s two main owners, Hamburg and Schleswig-Holstein, allowing them to increase the guarantees they had provided for HSH in exchange for an agreement that they would then sell off the bank by February 2018.
To facilitate that sale, HSH was allowed to offload a €5bn portfolio of non-performing shipping loans to Hamburg and Schleswig-Holstein last year, and the bank has since been working to sell a further €3.2bn of loans by the middle of 2017.
HSH said on Friday that €800m of the €1.64bn portfolio — consisting of aviation loans — had been sold to the Australian bank, Macquarie. A further €540m of commercial real estate loans will be bought by US lender Bank of America Merrill Lynch. The remaining €300m of loans were sold to a variety of investors. HSH said that the parties had agreed not to disclose the sale price.
Stefan Ermisch, chief executive, said that the deal was an “important milestone on the road to a change of ownership”. “It ensures that the bank will be further relieved of legacy assets, as agreed with the EU,” he said.
“We are currently involved in talks at an advanced stage about the sale of further packages from this market portfolio. These also relate to non-strategic legacy exposures in the areas of energy as well as international real estate,” he added. The disposals are expected by the middle of the year.
HSH said that as a result of the deal announced on Friday, which is due to complete in the second quarter of 2017, it expected its common equity tier one ratio — a closely watched gauge of financial strength — to increase by 0.1 percentage points. The bank’s ratio stood at 13.7 per cent at the end of September.
The bank reiterated that it expected to make an overall profit for 2016, but that it was likely to make less than in 2015, when it managed a pre-tax profit of €450m, and a net profit of €98m.
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