HSH Said to Confirm Outlook as Talks With Potential Buyers Start

  • Hamburg lender still sees lower profit on legacy ship loans
  • Said to talk with potential buyers before formal sale starts

HSH Nordbank AG will stick to its full-year outlook when it reports nine-months results next week, a crucial yardstick for potential investors as the bank starts to gauge interest in its planned privatization, according to a person with knowledge the plans.

State-owned HSH still expects significantly lower net income in 2016 as the legacy shipping loan book continues to be a burden, with writedowns on maritime credits seen at roughly 600 million euros ($638 million) in the second half, the person said ahead of the bank’s planned interim report publication on Dec. 9.

HSH, which is based in Hamburg, will confirm its outlook after rival Norddeutsche Landesbank this month forecast a full-year loss of more than 1 billion euros on higher risk provisions tied to soured legacy shipping loans. For investors in Germany and London, where HSH has started informal talks about its privatization, the earnings release is the last big financial report before the official sale process starts in January, according to the person.

A spokesman for HSH declined to comment. In 2015, the bank reported a pre-tax profit of 450 million euros and a net result of 98 million euros.

The states of Hamburg and Schleswig-Holstein, which hold about 85 percent of the bank, picked Citigroup to organize the sale, which was ordered by the European Union in a state-aid ruling and is scheduled to happen by 2018. Reuters reported on the pre-marketing talks late on Friday.

A separate, UBS Group AG-managed sale of 3.2 billion euros in troubled loans is well underway with the bank remaining confident that it will sell half the package this year and the rest by mid-2017, the person said. The bundle includes loans to the shipping, aviation, real estate and renewable energy industries.

HSH and NordLB, which is based in Hanover, Germany, each have about 8 billion euros in non-performing shipping loans in their books, according to the companies.

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