Germany’s HSH Nordbank has sold a real estate loan portfolio with a face value of €540 million to Bank of America Merrill Lynch as part of a wider €1.64 billion sale of its non-performing exposure.
The commercial real estate portfolio sits within HSH’s non-core business and relates to legacy loans written before 2009 secured by properties in Scandinavia, the Netherlands and Germany. The sale price for the transaction was not disclosed.
HSH, which is subject to a public sale process, is aiming to reduce its non-core debt pile ahead of a sale.
The bank announced that it has agreed the sale of legacy assets totalling €1.64 billion, contributing to a 1.3 percentage points drop in its non-performing exposure ratio which was most recently reported at 17 percent in September 2016. The bank’s CET1 ratio will rise by 0.1 percentage point, having stood at 13.7 percent on 30 September 2016.
As well as the property loans, HSH has entered into an agreement to sell an aviation finance portfolio of €800 million to Australia’s Macquarie Bank. HSH also sold another €300 million of debt with individual asset sales to other investors.
The sales form part of an EU agreement between the EU, the German federal government and the federal states which own HSH. Under the agreement, the bank is permitted to sell a guarantee-backed legacy loan portfolio totalling €3.2 billion on the market with an accelerated settlement of the loan loss provisions it set aside earlier against the guarantee, dating from the year 2009.
“This has been a transparent and competitive process that attracted very strong interest from international banks and debt investors. It ensures that the bank will be further relieved of legacy assets, as agreed with the EU. We are currently involved in talks at an advanced stage about the sale of further packages from this market portfolio. These also relate to non-strategic legacy exposures in the areas of energy as well as international real estate,” said Stefan Ermisch, CEO of HSH Nordbank.
“The sale marks another important milestone on the road to a change of ownership,” Ermisch added.