June 6, 2016 / 1:21 PM / 3 years ago

UPDATE 1-NordLB eyes taking full control of Bremer Landesbank unit -sources

* Move response ECB demand to shore up BLB capital -sources

* Other options also under discussion -sources

* Bankers aim to avoid triggering EU state aid case

* NordLB currently owns 55 pct of BLB (Adds detail, context)

FRANKFURT, June 6 (Reuters) - German state-controlled lender NordLB aims to take full control of its Bremer Landesbank (BLB) unit after regulators asked the Bremen-based lender to shore up its capital against bad shipping loans, sources familiar with the matter said.

NordLB, which owns 55 percent of BLB, has offered to merge with Bremer Landesbank in a move that would see the city state of Bremen, which owns 41 percent of BLB, become a minority shareholder of the combined bank, the sources said.

Other options for the lender with 29 billion euros ($33 billion) in assets are also being discussed, the sources said, adding that Bremen has not yet decided how to handle the situation. Injecting state capital into Bremer Landesbank would trigger state aid proceedings by the European Commission, which the owners hope to avoid.

NordLB declined to comment, while Bremen’s state senator responsible for finance was not immediately available for comment.

Bremer Landesbank said it was not aware of merger scenarios and declined to comment further.

At the weekend, sources familiar with the matter said the European Central Bank had urged Bremer Landesbank to increase its capital and weekly magazine Focus reported that the lender needed 700 million euros in additional equity.

Germany was one of the world’s main centres of global ship finance before the 2008 financial crisis, and the five German banks with the closest links to the shipping industry still have around 80 billion euros on loan to the sector.

NordLB and BLB, as well as peers such as HSH, Commerzbank, DVB and KFW, have taken writedowns and boosted capital buffers against the risk of shipping loans turning sour. ($1 = 0.8807 euros) (Reporting by Andreas Kröner; Writing by Arno Schuetze; Editing by Jonathan Gould and David Evans)

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