May 28 (Bloomberg) -- Six former HSH Nordbank AG board members should pay fines of as much as 150,000 euros ($204,000) for approving a transaction called Omega 55 during the global financial crisis, German prosecutors said.
All six former board members committed breach of trust and two of them false accounting over an 2007 collateralized-debt obligation deal, which led to about 50 million euros in losses, prosecutor Karsten Wegerich told a court in Hamburg today. Originally prosecutors estimated the damage done by Omega 55 to be about 160 million euros.
The former bank managers, including ex-chief executive officer Dirk Jens Nonnenmacher, approved the deal with BNP Paribas SA at the end of 2007, during the first months of the financial crisis. Under the 2.4 billion-euro transaction, HSH Nordbank was able to transfer risky loans to a special purpose vehicle called Omega 55.
“The defendants in a blind flight approved a transaction, which not only failed to relieve risk-weighted assets, but on the contrary led to a burden on assets,” Wegerich said. Board members should have asked the responsible departments for additional information on the potential risk of the transaction before approving the loan, he said.
The Hamburg-based lender was bailed out in 2009 with 30 billion euros in aid from German state and federal governments.
Prosecutors are also seeking suspended prison sentences of between 10 and 22 months for the board members.
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