Legacy Ship Portfolio Still a Heavy Burden for HSH Nordbank

German lender HSH Nordbank is in talks with its government owners and the European Commission over long-running dispute on state guarantees within the framework of the bank’s efforts to alleviate the pains caused by its USD 11 billion legacy ship portfolio.

Namely, despite progress in operating profit that amounted to EUR 222 million (USD 250 million) in the first half of 2015, the legacy shipping loan portfolio continues to weigh heavily on the bank and again made extensive valuation allowances unavoidable in the first half of 2015.

The debt waiver of its guarantors Hamburg and Schleswig-Holstein almost halved to € 289 million from 573 million and thus contributed € 284 million less to earnings than was still the case in the first half of the previous year.

In total, HSH Nordbank has meanwhile paid € 2.5 billion in cash to its guarantors Hamburg and Schleswig-Holstein since 2009.

“To this day, HSH Nordbank’s suffers from the serious omissions and poor decisions of the past. Its current management continues to work resolutely on addressing these mistakes. That is a painful way to go, but it is the only right one.

“Particularly with a view to the billions in ship loans we now need substantial relief for our balance sheet, which is the case that our shareholders Hamburg and Schleswig-Holstein are making in the talks with the EU Commission,” said Constantin von Oesterreich, Chairman of the Management Board of HSH Nordbank.

The bank said that it expects to reach an agreement in principle with its owners by autumn 2015.

 

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