HSH Nordbank AG, the world’s largest financier of ships, plans to cut the 7 billion euros ($9.5 billion) in loans held by its restructuring unit by more than one-quarter by the end of 2016.
To reach that target HSH will sell loan packages to investors, foster mergers between the many smaller German shipping companies, and pool distressed one-ship companies so that they can tap new funds, Wolfgang Topp, who heads the Hamburg-based bank’s unit, told reporters in Hamburg today.
“We expect to reduce the shipping portfolio by about 500 million euros to 750 million euros per year,” Topp said. Since the foundation of the restructuring unit in 2009 the bad bank rid its portfolio of 4 billion euros in shipping loans, he said.
Container shipping, the largest segment in HSH’s loan book, is in its sixth year of crisis as a glut of vessels reduces the prices companies can charge to transport goods. Deutsche Bank AG said last week European shipping lenders may accelerate sales of distressed loans to buyers such as U.S. private-equity firms as the assets have become a focus of the European Central Bank review of 128 euro area banks.
Topp said the ECB review is “neither speeding up nor slowing down” the reduction of shipping loans, which at the end of 2013 accounted for 7 billion euros at the unit. HSH’s core bank held another 14 billion euros in shipping debt, he said.
Topp reiterated that the bank is preparing a package of shipping loans for sale after a previous one made up of container ships and bulk carriers and worth about 300 million euros proved unsuitable with regard to size and age of the bulk carriers. “That failed transaction delayed us by three months,” he said.
The restructuring unit plans to cut its total loan book, which also includes real estate, sovereign debt and aviation, to 21 billion euros by the end of 2016 from 35 billion euros at the end of the first quarter, Topp said.