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HSH Nordbank gets €3-billion state bailout

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HSH Nordbank gets €3-billion state bailout
Photo: DPA
16:28 CET+01:00
Hamburg and the northern German state of Schleswig-Holstein on Tuesday bailed out the beleaguered HSH Nordbank with a fresh capital injection of €3 billion and guarantees totalling €10 billion.

Leaders from the two German states – Hamburg Mayor Ole von Beust and Schleswig-Holstein state premier Peter Harry Carstensen – hammered out the deal to save the state-backed bank in the city of Kiel. The bank, which helps finance regional savings banks and investment projects, faced having to shut down due to lacking equity.

“We had to act because the alternatives for both states would have been indisputably more expensive,” said Carstensen.

But he admitted it had been a “difficult decision” to use public money to bail out the HSH Nordbank.

Beust said the bank was an “important financer of important economic sectors in the region” and that Hamburg and Schleswig-Holstein had acted to protect hundreds of thousands of jobs.

The two states will split the aid, which will be fed into the bank via a public fund. The finance minister of Schleswig-Holstein, Rainer Wiegard, said the states‘ stake in HSH Nordbank will now climb to over 80 percent. Before the capital injection Schleswig-Holstein had held 29.1 percent, Hamburg 30.41 percent, while US investor J.C. Flowers had 25.67 percent.

Should the American private equity firm decide not to participate in the capital injection, its share of HSH Nordbank will be diluted.

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