HSH Nordbank winds down property business

HSH Nordbank intends to close down its real estate activities in Western Europe and the US as part of a major restructuring triggered by financial losses. The regional German financier presented a draft plan this week aimed at rebuilding its battered capital position. A decision on various proposals in the document will be taken next week.

A key element of what HSH Nordbank describes as a 'strategic re-alignment' is refocusing the bank's activities in its home regions of Hamburg and Schleswig-Holstein in Northern Germany. The bank wants to strengthen its position in the region's key industries: shipping, aviation, transport-related infrastructure and renewable energies.

Several business lines are being phased out, including the real estate businesses in the US and Western Europe. The bank - which is one of the largest real estate financiers in Germany - has offices dealing with property finance in London, Paris, Amsterdam, Copenhagen, Warsaw, Moscow, New York and Singapore. The re-organisation will halve the bank's balance sheet to a targeted EUR 115 bn in 2012.

HSH Nordbank said the withdrawal from various businesses, including international real estate, will be carried out 'gradually and in in-depth dialogue with those affected'.

The bank said it expected to report a net loss of EUR 2.8 bn before tax and one-off charges for 2008. In a statement on its preliminary results, the state-owned bank said the figure compares to net profit of EUR 285 mln a year ago. The EUR 2.8 bn loss includes impairments of around EUR 1.6 bn on the credit investment portfolio and further writedowns of EUR 900 mln as a result of the financial crisis.

According to several media reports, the German bank is in talks for a EUR 3 bn capital injection from its owners, the states of Schleswig-Holstein and Hamburg which each hold stakes of about 30%.