HSH Nordbank

HSH Nordbank
Aktiengesellschaft
Industry Banking
Founded June 2, 2003
Headquarters Hamburg, Germany
Key people
 Constantin von Oesterreich (CEO)
Dr. Thomas Mirow (Pres. of supervisory board)
Products Financial services
Decrease € 124 million (2012)
Total assets Decrease € 130.6 billion (2012)
Total equity 12.3% (2012)
Number of employees
 3,123 (2012)
Website www.hsh-nordbank.com

HSH Nordbank is a commercial bank in northern Europe with headquarters in Hamburg as well as Kiel, Germany. It is active in corporate and private banking. Considered to be the world’s largest provider of maritime finance,[1] its main focus is on shipping, transportation, real estate and renewable energy. The bank was created as a result of a merger between Hamburgische Landesbank and Landesbank Schleswig-Holstein on June 2, 2003. HSH has significant operations in Luxembourg, New York City, London (the Bank no longer has an office in London) and Singapore. As of 12/2009 it employed 4,188 people worldwide.

As of 12/2009 HSH Nordbank had a balance sheet of EUR 174.5 billion and reported a loss of EUR 678 mn.[2]

Ownership

The shareholders are:

Owner Share
HSH Finanzfonds AoR 65.00%
Hamburg 10.80%
Schleswig-Holstein 9.58%
J.C. Flowers & Co. 9.31%
Savings Banks Association of Schleswig-Holstein 5.31%

In the merger the City of Hamburg and the State of Schleswig-Holstein agreed to hold the majority of shares at least until End of 2013.

Financial crisis of 2007-2010

HSH Nordbank buckled under excessive risk-taking prior to the financial crisis of 2007-2010 , when it had sought to expand beyond its roots as a regional lender to companies and savings banks into global capital markets.[3][4] With the beginning of the crisis, HSH had to report losses on their credit investment portfolio. In September 2008 HSH Nordbank announced further writedowns. As a direct consequence the CEO Hans Berger stepped down and in the following weeks HSH announced extensive restructuring.[5] Branches in Copenhagen and Hong Kong were reduced to representations and new business will be focussed on the core region in northern Germany.

In December 2008 HSH Nordbank was granted to issue up to EUR 30 billion guaranteed notes under the German SoFFin program. One requirement that was imposed on HSH was to raise the capital ratio to at least 8%. On January 20, 2009 EUR 3 billion 3 year guaranteed notes were issued.[6] On February 24, 2009 HSH received new capital of EUR 3 billion and credit guarantees of EUR 10 billion by the two main shareholders, the states of Hamburg and Schleswig-Holstein.[7] The other shareholders, JC Flowers and the savings bank association, did not participate in the capital infusion. Together with this increase of its core-capital, HSH announced further restructuring. It plans to spin off non-strategic activities and the Toxic asset portfolio into a—yet to be created—Bad Bank.

On April 9, 2009, president of supervisory board Wolfgang Peiner appointed Freshfields Bruckhaus Deringer to investigate recent management decisions of the Vorstand.[8] On April 17, 2009 the supervisory board of HSH Nordbank relieved Frank Roth, member of the management board of his duties and started pressing criminal charges against him. The bank claims that Roth leaked strictly confidential information to outside parties.[9]

On October 13, 2009, Norddeutscher Rundfunk reported on a questionable CDO deal codenamed "Omega 55" between HSH Nordbank and BNP Paribas in late 2007, that eventually cost HSH Nordbank 500 million Euro. Parts of that deal were not disclosed to the German Federal Financial Supervisory Authority (BaFin).[10]

The European Commission, HSH Nordbank and its owners negotiated for years over a plan to restore the bank to health and avoid future state aid.[11] The European Commission approved a bailout in March 2016 and HSH asked investment bank UBS to find buyers for the loans which were extended to shipping and aircraft companies and for real estate and renewable energy projects.[12] In an initial deal, Macquarie Bank and Merrill Lynch bought 800 million euros in aviation loans and 540 million euros in real estate credits, respectively.[13] In mid-2016, the bank’s owners hired Citigroup to organize the process to privatize it under European state-aid rules by the end of February 2018. Over the course of 2017, Apollo Global Management of the United States[14] as well as Anbang Insurance Group,[15]HNA Group and ICBC[16] of China were considered as interested buyers but ultimately did not sumbit a bid for the bank.[17]

References

  1. ↑ Jack Ewing (December 4, 2012), Global Shipping Industry’s Troubles Are Threat for Biggest German Banks New York Times.
  2. ↑ "Annual Report as of 31 December 2009" (PDF). HSH Nordbank. 15 April 2010. Retrieved 2010-04-15.
  3. ↑ Nicholas Brautlecht, Nicholas Comfort and Steven Arons (January 26, 2017), China Not Europe May Salvage HSH as German Bank Looks East Bloomberg News.
  4. ↑ Jack Ewing (December 4, 2012), Global Shipping Industry’s Troubles Are Threat for Biggest German Banks New York Times.
  5. ↑ "Chief Executive Officer Hans Berger resigns" (Press release). HSH Nordbank. 10 September 2008. Retrieved 2009-03-09.
  6. ↑ "FITCH RATES HSH NORDBANK AG'S GUARANTEED ISSUE 'AAA'" (PDF). Fitch Ratings. 14 January 2009. Retrieved 2009-03-09. |first1= missing |last1= in Authors list (help)
  7. ↑ "Germany's HSH Nordbank Saved from Collapse". Spiegel Online. SPIEGELnet GmbH. 24 February 2009. Retrieved 2009-03-09.
  8. ↑ "HSH Nordbank: Überprüfung der Vorstände angeordnet". NDR. 9 April 2009.
  9. ↑ "HSH Nordbank to press criminal charges against Management Board member Frank Roth". HSH Nordbank. 17 April 2009. Retrieved 4 June 2009.
  10. ↑ Hornung, Peter; Webermann, Jürgen (October 13, 2009), "HSH-Chef genehmigte offenbar verlustreiches Geschäft", NDR Info. Omega 55 was a hybrid CDO which exposed HSH Nordbank to the risks of default of other financial institutions including the now bankrupt Lehman Brothers and Washington Mutual. However, also included in the deal were several billion euros of risk tied to HSH Nordbank's own assets. It is alleged that he inclusion of this last element allowed HSH Nordbank to move several billions of risky assets off its balance sheet at year end and avoid costly capital reserves which BaFin would require the bank to post. The assets were repurchased several weeks later after auditors had closed the books of the bank for the year.
  11. ↑ Andreas Kröner and Maria Sheahan (January 23, 2017), HSH Nordbank invites indicative bids from potential buyers Reuters.
  12. ↑ Arno Schuetze (June 8, 2016), HSH Nordbank plans to sell $3.7 bln in bad loans under bailout programme -sources Reuters.
  13. ↑ Nicholas Brautlecht, Nicholas Comfort and Steven Arons (January 26, 2017), China Not Europe May Salvage HSH as German Bank Looks East Bloomberg News.
  14. ↑ Alexander Hübner (April 2, 2017), HNA, Apollo Global among bidders vying for HSH Nordbank: sources Reuters.
  15. ↑ Tom Sims (May 9, 2017), German regulator welcomes Chinese interest in nation's banks Reuters.
  16. ↑ Arno Schuetze and Jan Schwartz (February 27, 2017), HSH Nordbank attracts handful of potential bidders - sources Reuters.
  17. ↑ Maria Sheahan (May 10, 2017), HNA won't submit bid for Germany's HSH Nordbank: Handelsblatt Reuters.
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