The German state of Lower Saxony has begun exclusive negotiations with US financial group Cerberus over a possible takeover of NordLB’s shipping sector debts
Two portfolios with a book value of €2.5B are for sale - “Tower Bridge” and “Big Ben." If Cerberus were to buy the funds, it would be at a substantially discounted rate, similar to the approach to a debt purchase that would be taken by any commercial factor, so ultimately the state’s taxpayers pick up the bill.
Nord LB says that it is steadily reducing its exposure to "foul" ships’ credits is making progress and it is expected that the total amount of €7.3B in September 2018 will be reduced to less than €5B.
Cerberus recently invested in HSH Bank and is thus considered a natural suitor for Nord LB, which needs around €3.5B in fresh capital just to compensate for the value of debt write-downs. Whether Cerebrus would be prepared to become a minority owner of the state bank is open to question.
Market rumours suggest, instead, that a merger will be sought between Nord LB and Helaba, the state bank of Hesse and Thuringia. "We are talking with all parties, including representatives of state banks,” said Reinhold Hilbers, Lower Saxony’s Minister of Finance and Chairman of the Advisory Board of Nord LB.