The EU Commission has accepted a comprehensive rescue plan for the German shipping bank - HSH Nordbank - which will offload approximately USD 7 billion of its troubled assets back onto the government and privatize.
The bank's owners, which bailed out HSH in the financial crisis, will have two years to privatise the shipping lender, pending the final EU decision in the first half of 2016, HSH and the European Commission said
"Our exposure to the shipping business, which has been crisis-prone for years, and thus also to the US dollar, will decrease significantly," says Stefan Ermisch, deputy chairman of the management board and chief financial officer of the world's largest lender for the maritime sector.
Under the deal with the commission, struck after two years of negotiations, HSH can transfer 6.2 billion euros of assets — mainly non-performing shipping loans — to a “run-down” unit managed by its state shareholders, and sell an additional 2 billion euros of non-performing assets on the open market.
This will halve the bad loans on the bank’s balance sheet to around 15 billion euros.
The privatisation of the operating company is expected within 24 months from the binding decision of the EU Commission. The bank expects this decision in the first half of 2016, although this deadline may be extended by six months.
HSH Nordbank, majority-owned by the regional states of Schleswig-Holstein and Hamburg, turned to its owners after risky assets turned sour in 2008 and it got hit by the slump in global trade in the wake of the financial crisis.
“This agreement in principle is extremely important and demonstrates the constructive willingness of all concerned parties. The Bank will be better able to deploy its capabilities, and to show this, once relieved of major legacy assets. This will mean more stability as well as planning certainty for shareholders, staff and clients and thereby a stronger position in the marketplace. The substantially lower guarantee fees and future easing of adverse portfolio items will in addition improve the quality of our earnings," said Constantin von Oesterreich, Chairman of the Management Board of HSH Nordbank AG.