The battle to secure German shipping lender HSH

Tue Sep 17, 2013 1:13am EDT
 
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By Laura Noonan

HAMBURG (Reuters) - Once the beacon of a brave new future for Germany's publicly-owned regional banks, HSH Nordbank is now a focal point of concern over the sector.

The Hamburg and Kiel-based bank earned its trail-blazer status by attracting 1.25 billion euros from US investor J.C. Flowers in 2006 and touting plans to list a significant minority of its equity on the stock market.

Now it is blazing a very different trail - the first Landesbanken to return to the European Commission for approval after it regretted a 2011 decision to hand back some of its original post-crisis bailout and asked for it to be re-instated.

Two of the bank's shareholders told Reuters they were concerned about the prospect of the European Commission (EC) imposing future restructuring measures on the bank, whose core shipping market is in a recession that may last two more years.

"We are riding the razor's edge - and it will stay like this for a while," one shareholder said, voicing fears that the ECJ would not be satisfied with Ash's business plan and would order the bank to be closed.

The bank's shareholders are the City State of Hamburg and the State of Schleswig-Holstein (85.4 percent), the Savings Banks Association of Schleswig-Holstein (5.3 percent) and J.C. Flowers, whose stake has fallen to 9.3 percent from 26.6 percent after it was diluted by state-funded bailout.

HASH itself is more optimistic about its ECJ prospects. "The bank is confident that the measures from the European Union will not be changed," said a source familiar with Ash's position. "The ECJ understands that the earlier measures were substantial."

HASH has already reduced its balance sheet from 210 billion euros in 2008 to 120 billion euros at June 2013, a speed of delver aging unmatched in Germany.   Continued...