Post-ECB Stress

The Next Big Hurdle

Let's hope this isn't her last day on the job.
  • Why it matters

    Why it matters

    Germany’s network of state-owned regional lenders like HSH have long been a problem spot for Germany’s banking sector. Critics have called for the system to be scrapped.

  • Facts


    • German states Hamburg and Schleswig-Holstein own about 85 percent of HSH Nordbank.
    • The two states issued public guarantees to the bank in the aftermath of the 2008 financial crisis. The guarantee was recently raised to €10 billion.
    • HSH Nordbank plans to cut a fifth of its workforce in a bid to reduce costs by €170 million by end-2017.
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On paper, all of Germany’s major banks have been given a clean bill of health by the European Central Bank, which last month completed an invasive scrutiny of Europe’s largest banks. None of the 24 German banks that were subjected to the ECB’s “stress test” are currently being required to raise additional funds.

But for at least one German bank however, the “pass” grade from the ECB was something of an illusion.

HSH Nordbank, a state-owned lender that ran into trouble by financing the global shipping industry ahead of the 2008 financial crisis, just barely scraped through the central bank’s test. Many had thought it would in fact fail. The nail-biting result called for a glass of champagne and illicited some surprise.

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