HSH NORDBANK

Report: China’s HNA eyes state bank

Feederschiff im Hamburger Hafen
HNA is trying to create synergies in its shipping finance unit. Picture source: Picture alliance.

China’s HNA Group hasn’t finished its shopping spree in Germany just yet.

After increasing its stake in troubled Deutsche Bank and acquiring loss-making Frankfurt-Hahn airport, the Chinese conglomerate has now made a bid for HSH Nordbank, the ailing state bank owned by Hamburg and the state of Schleswig-Holstein, according to Bloomberg news, citing people familiar with the matter.

The HNA Group – an aviation, logistics and services conglomerate – reportedly hopes to achieve savings in its shipping finance unit through the acquisition of HSH Nordbank, which remains one of the world’s largest shipping financiers with a volume of €17 billion last year.

The Chinese conglomerate is apparently working with asset manager C-Quadrat Investment, which manages HNA’s 4.76-percent stake in Deutsche Bank, on the acquisition.

Apollo Global Management has also made a preliminary bid, according to Bloomberg. Schleswig-Holstein’s finance minister and Hamburg’s finance senator said they were “very pleased” with the bids they have received for HSH Norbank so far.

Once viewed as a cash cow by Hamburg and Schleswig Holstein, HSH Nordbank has become a financial quagmire for the states. The bank was hit hard by the 2008 financial crisis due to its involvement in sub-prime mortgages in the United States and its exposure to the shipping industry.

When the shipping industry failed to recover, Hamburg and Schlwesig Holstein were forced in 2015 to raise their loan guarantee for HSH Nordbank by €3 billion. The European Commission approved the intervention on the condition that the states sell or liquidate the bank by February 2018.

Though HSH Nordbank’s “bad bank” has more than €20 billion in non-performing ship loans, its core bank has generated €639 million from commercial real estate last year.

Frank Drost is a Handelsblatt Editor in Berlin, covering financial supervision and banks. drost@handelsblatt.com.

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