HSH Nordbank Board Approves Raising Guarantee Facility

The supervisory board of HSH Nordbank AG, the world’s largest shipping bank, has approved increasing its guarantees as the lender strives to improve its core capital ratio.

The guarantee facility will be raised to 10 billion euros ($13.5 billion) from 7 billion euros, the company said in a statement today. HSH Nordbank expects a loss for fiscal 2013 and a return to a profit in 2014, the bank said.

“By replenishing the guarantee, our core capital ratio will be sustainably strengthened,’ ’HSH Chief Executive Officer Constantin von Oesterreich said in the statement. ‘‘This will allow the bank to meet the requirements of rating agencies and investors.”

Hamburg and Schleswig-Holstein, which control more than 80 percent of HSH Nordbank, provided the German lender with 3 billion euros in capital and 10 billion euros in guarantees to cover potential losses during the global financial crisis. The lender has since repaid some of the guarantees it received from the two states, which in October signaled they are willing to bring the guarantees back up to the original 10 billion euros to help the lender.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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