Germany’s NordLB Bank: “40% Of Our Shipping Loan Book Is Non-Performing”

The challenges facing Germany’s second-largest shipping lender, German Landersbank NordLB first emerged this summer, when we reported that the bank was considering taking full control of its smaller, distressed peer, Bremer Landesbank (BLB), which was struggling under the weight of a portfolio of bad shipping loans in what effectively constituted a state-backed bailout. BLB, of which NordLB already owns 54.8%, had warned that it would have to take a 400m writedown on its shipping portfolio, and that as a result it was facing a ‘mid-triple-digit million loss’ this year. As Germany’s Handelsblatt wrote back in July, “shipping loans have brought Bremer LB into distress and the bank can not survive without government help, but a direct capital injection from Lower Saxony now looks unlikey.”
The situation was ultimately “resolved”, when NordLB said in September that it would take full control of Bremer Landesbank (the transaction is expected to close in January 1 2017), with BLB’s balance sheet being absorbed by that of its bigger Landesbank peer, however it also meant that NordLB would wind up holding even more impaired shipping loans.
Then, the full extent of NordLB’s problem shipping exposure was revealed today, when during a call with reporters, designated CEO Thomas Buerkle said that a whopping 8 billion, or 40%, of its shipping loan book was non-performingand that NordLB wants provisions to cover 50% of NPLs by year-end, vs 44% now, to limit balance sheet risks.

This post was published at Zero Hedge on Nov 24, 2016.

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