HSH Nordbank to Sell USD 3.7 Bn, Transfer USD 5.6 Bn in Bad Loans

Germany’s HSH Nordbank, one of the world’s biggest providers of shipping finance is putting up for sale up to EUR 3.2 billion (USD 3.7 bln) worth of non-performing loans.

“The bank has also already identified the exposures of up to USD 3.2 billion that are to be sold on the market by mid 2017. Unlike the portfolio to be sold to the federal states, the market portfolio also comprises real estate, energy and aviation sector loans alongside ship loans,” the bank said.

The sale forms part of the bank’s restructuring plan as privatization efforts gain momentum. In May, the European Commission said that the bank’s privatisation has to be completed by the end of February 2018.

However, before the privatization plans go ahead, the bank is set on transferring a huge portion of its EUR 8.2 billion portfolio to its majority owners, Hamburg and Schleswig-Holstein.

In its financial report for 2015, issued today, the bank said that it was progressing well with respect to the transfer of non-performing ship loans of initially EUR 5 billion (USD 5.68 bn) to the federal state owners, which recently established the ‘hsh portfoliomanagement AöR’ company for this purpose.

The plan is to transfer the state portfolio by 30 June 2016.

Given the still deteriorating shipping markets and the effects already taken into account from the impending transfer of non-performing loans, the bank made substantial loan loss provision of EUR 3.02 billion in 2015 from EUR 486 million a year earlier, the bank said today.

“The 2015 balance sheet clearly shows that we are making gradual progress. We are focussing on what matters: the business model is becoming appreciably more balanced and our figures will in the future be less complex. After a clearly profitable financial year we have a good basis ahead of the change of ownership with all its challenges,” Constantin von Oesterreich, Chairman of the Management Board of HSH Nordbank AG, said.

For 2016, HSH Nordbank projects a profit, although this is unlikely to match previous year’s high figure because the bank anticipates further normalisation this year with significantly fewer exceptional factors than in the preceding years.

HSH Nordbank plunged into financial woes in 2008 as the financial crisis disrupted a number of maritime loans, worth billions of euros.