Brussels, 20/09/2011 (Agence Europe) - The European Commission gave its approval, on Tuesday 20 September, to restructuring aid for German regional bank HSH Nordbank consisting of a capital injection of €3 billion and a risk shield of €10 billion provided by the regions of Hamburg and Schleswig-Holstein, which together hold 85% of the bank's capital. The support also includes liquidity guarantees amounting to €17 billion.
In return, the bank has given a commitment to reduce its balance sheet by €82 billion by 2014 - a 61% reduction - in the aircraft financing, corporate business line, real estate and shipping, a sector where it is particularly active. It will also have to pay higher remuneration in exchange for the guarantee provided by the two regional authorities, in particular in the form of the payment of a lump sum of €500 million in shares.
The aid provided by the two regions in 2009 was to cover losses with a vast portfolio of impaired assets. This support amounts to 11.6% of the bank's risk weighted assets, said Commission Vice-President Joaquín Almunia in a speech presenting the decision. He said that the restructuring plan should result in a leaner, more viable bank, less dependent on volatile businesses and with reduced financing needs.
The commissioner spoke, too, of the approach the Commission intends to follow on state aid for banks, confirming that, because of the difficult economic context, it has decided to extend crisis state aid rules put in place in 2008/2009 to enable governments to provide public support - if needed - to their banks beyond 2011. The hope is still to return to normal as soon as circumstances permit. He said that public aid should only be used as a last resort, when banks have exhausted all other attempts to finance themselves on the markets. (FG/transl.rt)