HSH Nordbank Gets Bids from Investors, Final Sale Talks Starting

Owners of the German-based provider of shipping finance HSH Nordbank have received several binding bids for the entire bank.

Following the indicative bids made in March and June of this year, a crucial milestone on the way to privatization has thus been reached, HSH Nordbank said in a statement.

Although the bidders have not been disclosed, Reuters reported that binding offers were received from private equity groups Apollo, Cerberus and J.C. Flowers by October 27.

The final sale negotiations are now starting for the federal states Hamburg and Schleswig-Holstein.

“These binding bids take us a big step closer to a successful privatisation solution. In the future, we will support our federal state owners to the best of our ability because we regard this firm investor interest as both an affirmation and an incentive… We will also be reducing our legacy assets dating back to the years before 2009 to an entirely acceptable degree, thereby keeping our capital ratios at a solid level,”  Stefan Ermisch, Chief Executive Officer of HSH Nordbank, said.

The federal states will study the bids and engage in the final negotiations as the EU Commission’s decision requires the sale agreements to be signed by February 28, 2018.

In January this year, HSH Beteiligungs Management started the bidding process to sell the majority of the shares in HSH Nordbank. The company, owned by the aforementioned federal states, put up for sale up to 94.9% of HSH Nordbank’s shares.

HSH Nordbank encountered financial problems in 2008 as the financial crisis disrupted a number of maritime loans, worth billions of euros.

Following an increase in group profit to EUR 173 million (USD 201.3 million) before taxes as at June 30, 2017, initial calculations put pre-tax profit slightly higher as at September 30.

HSH Nordbank said it made progress with its accelerated reduction of non-performing legacy exposures dating back to the years before 2009 – at the end of 2016, the Non-Core Bank held EUR 13.6 billion of such exposures. Based on the forecast as updated in August, the amount of non-performing loans in the Non-Core Bank will have been reduced to less than EUR 8 billion at the end of 2017.

According to initial calculations, the reduction targeted for the full year was already nearly achieved on September 30. The target for this portfolio next year is a figure below EUR 4 billion. Based on existing loan loss provisions, around 50 percent of this amount is expected to be furthermore covered.

“From today’s perspective, we shall even be able to beat our stepped-up reduction targets for 2017 thanks to the significant achievements after nine months,” Ermisch concluded.

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