Hamburg agrees HSH Nordbank restructuring plan

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Friederike Krieger, Cologne - Tuesday 24 February 2009

 

THE German state governments of Hamburg and Schleswig-Holstein have agreed to the restructuring plan for HSH Nordbank, the world’ s largest shipping bank. 
Both states hold stakes in the bank, as well as the US-Investors JC Flowers and regional savings banks. 
Crisis-ridden HSH Nordbank sought €3bn from Hamburg and Schleswig-Holstein as well as fresh guarantees of €10bn. HSH needs the money to pay for losses incured during the financial crisis. 
For 2008, it has forecast a consolidated loss of €2.8bn and expects further losses in 2009 and 2010. 
“After the changes, the bank will have a core capital ration of 9% and will shrink its balance sheet in the following years by about half to €100bn,” said chief executive Jens Nonnenmacher. 
HSH is planning to scrap its €750m container financing business, but will keep its shipping, aviation and transport units. However, the German financial services industry is united in expecting that HSH will run its ship financing in an increasingly risk-averse fashion. 
The bank currently has ship finance lending of €30bn on its books. 
As part of the wide-ranging reduction of activities, HSH plans to cut 1,100 of its 4,400 jobs. 
While Mr Nonnenmacher is optimistic that the restructuring plans will help to cure the bank, Wolfgang Kubicki of the Freie Demokratische Partei (FDP) is doubtful. The chairman of the FDP parliamentary group in Kiel expects that the bank will need €8bn-€9bn in the next four to five years to be in the black again. 
The €3bn provided by Hamburg and Schleswig-Holstein is barely enough to keep the business running in 2009, said Mr Kubicki. Furthermore he believes that HSH will be too small to survive after shrinking the balance sheet to €100bn. 
Meanwhile, HSH’s supervisory board chairman Wolfgang Peiner announced his resignation. The former insurance manager and Hamburg minister of finance admitted mistakes had been made in relation to the financial control of the bank. The volume of toxic papers had been too large in relation to its low equity and its risk management, he said. 
Mr Peiner will leave HSH’s supervisory board after the annual general meeting in April 2009.