Federal states call for change of CEO at HSH Nordbank

The HSH Nordbank saga took another turn this week when the state governments for Hamburg and Schleswig-Holstein asked Hilmar Kopper, chairman of the supervisory board at the troubled Landesbank, to dismiss CEO Dirk Jens Nonnenmacher and to appoint a new chairman of the management board.

Together, Hamburg und Schleswig-Holstein hold 85.5% of the bank’s shares. The supervisory board will discuss the next step at a meeting on 2 December, a HSH Nordbank spokeswoman told PropertyEU. She declined to comment on who might succeed Nonnenmacher who, for now, is expected to continue to perform his duties.

‘HSH Nordbank is a major player in Germany,’ said one Frankfurt-based analyst who asked not to be named. ‘The issue that hasn’t really been discussed yet is whether Nonnenmacher has done a good job. At the moment, the situation is very political: politicians want him gone and I think it’s just a matter of time before that happens. The prosecutors investigating haven’t found any wrongdoing - yet,’ he said.

The Landesbank, or state-owned bank, was brought to its knees by the financial crisis that erupted in 2008. To date, the bank has used EUR9 bn in guarantees from Soffin, Germany’s financial market stabilization fund. Hamburg prosecutors are currently investigating six managers regarding business operations that led to the lender’s bailout.

Four managers, including former HSH Nordbank COO Frank Roth, are no longer with the company. Two managers, including CEO Dirk Jens Nonnenmacher, are still employed by the bank, HSH Nordbank confirmed. Nonnemacher is being investigated regarding concerns that he may have approved a ‘spying’ operation on Roth using a private security firm during the time he was still employed by the company. Nonnenmacher has always denied the allegation and the private security agent who made a statement has since revoked his allegations.

HSH Nordbank was just one of several high-profile Landesbanken casualties in Germany last year. Bavaria has to inject EUR10bn into its regional bank BayernLB last year and North Rhine-Westphalia and Baden-Württemberg each had to provide EUR5 bln for WestLB and LBBW respectively. Since the crisis, HSH has withdrawn from its international markets for real estate lending and is focusing now exclusively on Germany. For shipping, transportation and aviation financing, they remain globally active.

Earlier this month, BayernLB pulled out of talks with WestLB regarding a merger that would have led to a groundbreaking consolidation among Germany’s troubled state-owned banks. The combined bank would have created Germany’s third-biggest lender by assets, after Deutsche Bank and Commerzbank.

WestLB has also failed to sell its property lending arm, Westdeutsche Immobilienbank, under conditions imposed by the European Commission in exchange for state aid. The bank put the sale on hold two weeks ago, following ‘disappointing bids’, a WestLB spokesman told PropertyEU. The European Commission stipulated that the sale should take place before the end of the year. WestLB has asked for an extension and is waiting to hear back, he said.

According to Martin Braun, a partner in the capital markets group at Cushman & Wakefield in Frankfurt, refinancing hurdles may have deterred would-be investors: ‘If a third party investor buys WestImmo, they’ll need proper refinancing. It’s a structural issue when separating WestLB and WestImmo and I think this has concerned would-be investors,’ he said.