FRANKFURT, Sept 30 German public sector lender
HSH Nordbank rejected a magazine report on Sunday that
said the bank saw a rising likelihood that it would need to draw
on a 7 billion euro ($9 billion) state guarantee facility.
The bank, which specialises in the troubled ship financing
market, has suffered during the slowdown in the global economy
and reported sharply lower first-half results last month.
Der Spiegel magazine said that HSH Chief Executive Paul
Lerbinger had told Hamburg politicians that the chances were
higher than 50 percent that the bank would need to use the
facility provided by its state owners before the end of the
The magazine also cited a confidential internal HSH report
to that effect.
"HSH Nordbank rejects the Spiegel's account," the bank said
in a statement. "This situation will not come to pass."
The lender also pointed out that the guarantee rules require
it to take a first loss of 3.2 billion euros before state
support can kick in. It added that the loss on the portfolio
guaranteed by the state was only about 233 million euros at the
end of June.
HSH Nordbank said last month that the gloomy outlook for
shipping would burden the bank for the foreseeable future. It
warned that the trough in shipping would be reached in the next
12-18 months and it would need to boost its loan loss provisions
as a result.
Credit rating agency Moody's last week said it was
considering downgrading the bank's long-term ratings over
concerns about its operating outlook after the first-half
results and uncertainties about its future business model.
The lender is about 90 percent owned by the German city
state of Hamburg and the state of Schleswig-Holstein, plus local
savings banks. Trusts advised by U.S. investor J.C. Flowers hold
($1 = 0.7773 euros)
(Reporting by Jan Schwartz and Jonathan Gould; Editing by David