HSH Nordbank owners look to more state aid

City A.M. Reporter
THE public-sector owners of Germany’s HSH Nordbank said this weekend they were examining the possibility of increasing state aid to prop up the bank in face of higher potential losses from shipping loans.

HSH, one of the world’s biggest shipping financiers, is suffering from a four-year slump in the industry.

“All those involved are aware that an increase of the framework guarantee is the most effective measure to boost the core capital,” a spokesman for the Finance Ministry of regional state Hamburg told Reuters late Saturday.

A spokesman for the Finance Ministry of Schleswig-Holstein state said it was examining an increase of state guarantees “as likely to be the most effective instrument”.

The bank originally had €10bn (£8.06bn) of guarantees from the two states, and last year it returned €3bn, but the slowdown in the global economy has hit shipping finance hard. HSH reported sharply lower first-half results and warned of further potential losses in August.

The Hamburg-based lender in recent weeks has given the impression that it could manage with a smaller framework of guarantees even though it projected much higher default rates from its ship loans.