German landesbank HSH says well prepared for ECB tests

HAMBURG Fri Aug 29, 2014 4:53am EDT

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HAMBURG Aug 29 (Reuters) - German state-backed lender HSH Nordbank on Friday said it is confident of its capital cushion but could not exclude a risk of falling short in a European Central Bank test of the landesbank's ability to withstand financial shocks.

"HSH Nordbank has a resilient capital base with which it is well prepared for the ECB's Comprehensive Assessment and the related Asset Quality Review as well as the stress test," the lender said in a statement on its half-year results.

HSH has a heavy exposure to the troubled market for shipping loans that analysts have said would make the tests particularly challenging.

The lender said its Common Equity Tier 1 ratio - a measure of its capital strength - stood at 12.8 percent at the end of June, including the effect of a loss guarantee buffer provided by its state owners, worth 2.8 percentage points.

However, HSH also said in a report on risks that it could not exclude new risks might emerge in the health checks that could cause it technically to fall short of the minimum 8 percent core capital ratio required by the ECB in the tests. (Reporting by Jan Schwartz; Writing by Jonathan Gould; Editing by Christoph Steitz)

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