HSH Nordbank Sold to Private Equity Firms
HSH Nordbank, once the world's largest shipping bank, has been sold to American private equity investors just before an EU deadline that would have forced its dissolution.
HSH took heavy losses during the financial downturn in 2007 and the shipping downturn in 2016, and it required two separate taxpayer bailouts to remain open. The EC had set a deadline of February 28 requiring the bank's previous owners, the German states of Hamburg and Schleswig-Holstein, to either sell off the bank or wind down its operations.
$7 billion of HSH's non-performing loans will be placed into an "acquisition vehicle" that will be sold off separately. J.C. Flowers, Cerberus, Centaurus Capital, GoldenTree and Austrian bank BAWAG will pay $1.2 billion for the bank's remaining assets and will assume its other credit obligations.
Hamburg and Schleswig-Holstein say that they have taken losses on HSH totaling up to $17 billion, but Olaf Scholz, the mayor of Hamburg, told reporters Wednesday that the taxpayers had received a better price from the buyers than had been expected. Schleswig-Holstein prime ministerDaniel Günther put it differently, describing the sale as a "difficult day for our two states."
The European Commission and European Central Bank must be convinced that HSH is a viable entity before the acquisition can be finalized. The newly reconstituted bank must also pass muster with the private Association of German Banks for deposit insurance, reports FT. If approved, HSH Nordbank is expected to continue operations under another name - as yet not announced - and to shed an additional 300-600 employees, bringing its size to about 1,300 people.