HSH Nordbank announces staff cuts after privatization

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The recently privatized HSH Nordbank has announced that a wider process of corporate reform will also entail layoffs at the Hamburg-based financial institute.

HSH Nordbank chief executive officer Stefan Ermisch told press at the presentation of the company’s 2017 earnings figures that the number of permanent staff would decline from currently around 2,000 to below 1,600 by mid-2019.

Ermisch noted that further jobs cuts could occur beyond that period as well, but said he was still unable to provide an exact figure for the number of affected positions.

The German states of Hamburg and Schleswig-Holstein have recently sold their controlling stakes in HSH Nordbank to the U.S. investment firms Cerberus and J.C. Flowers. The sale was ordered by European Union competition authorities and marked the first ever privatization of a regional government-owned bank in Germany.

Considered to be the world’s largest provider of maritime finance, the bank was heavily-hit in the 2007/08 financial crisis, leading to the emergency provision of government credit guarantees worth 10 billion euros. Following an investigation into HSH Nordbank on suspicion of having received illegal state aid from German authorities, the EU Commission ruled in 2016 that the financial institution must be privatized.

The U.S. investment consortium which subsequently acquired the bank for 2.5 billion euros has since expressed hope that the transaction could be completed entirely by the summer of 2018. The EU Commission and the Hamburg state government have yet to grant their final approval for the deal.

In the meanwhile, Ermisch has already announced plans to progress with an ambitious corporate restructuring process which would witness the bank focus more on international business and real estate, while adopting a more cautious approach in its traditional niche of maritime finance.

“We have succeeded with the privatization and are now entering a new period”, Ermisch said on Thursday.

Divestment from non-performing loans caused HSH Nordbank to suffer pre-tax losses of 453 million euros in 2017. The bank also revealed on Thursday that it would likely suffer losses around 100 million euros as a consequence in 2018 as well.

Nevertheless, Ermisch expressed confidence that the concentration of distressed assets in a “bad bank” meant that HSH Nordbank was now “completely and finally” free of legacy costs and could hence concentrate again on the future.

 

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