Nordbank Doubles Ship Financing Losses

HSH Nordbank, the world’s biggest ship financier, doubled loss provisions at its shipping unit to nearly $1.5 billion in the first nine months of the year.

As a result, the German bank swung to a $1.07 billion net loss on its shipping book in the nine months to Sept. 30 from $273 million income a year ago.

Stripping out the loan provisions, the publicly-owned bank boosted shipping earnings year-on-year to $487 million from $411 million.

“In spite of the increased ship loan loss provisions caused by the market, in 2009 we will only experience marginal loan defaults,” said Harald Kuznik, head of shipping at the Hamburg-based bank.

“Our decades of experience help us to manage our risks and steer our way through this business cycle in the sector,” Kuznik said.

HSH said shipping markets bottomed out in the third quarter, with tankers and dry cargo ships showing signs of recovery.

“By contrast, container shipping, which is dependent on consumer spending, remained volatile. Here the stabilized demand has not yet led to a noticeable upturn in charter rates and ship values as fleets have continued to grow at the same time,” the bank said.

HSH, which has a $45 billion shipping portfolio, is a member of the Albert Ballin consortium, owner of 56.7 percent of German ocean carrier Hapag-Lloyd which recently obtained state guarantees on loans worth $1.8 billion, some of which will be provided by the bank.

European Union anti-trust regulators are currently investigating a $20 billion German state aid package for the bank to ensure it does not breach EU rules on government subsidies.

Contact Bruce Barnard at brucebarnard47@hotmail.com.