U.S. private equity firms Cerberus Capital Management LP and J.C. Flowers & Co. LLC have struck a deal to acquire troubled German lender HSH Nordbank AG for up to €1 billion, "people involved in the matter" told The Wall Street Journal.

The deal could be disclosed as early as the week of Feb. 26, but it could still fall through, according to a source.

The bank, which is 85% owned by the German states of Hamburg and Schleswig-Holstein, will retain a shipping portfolio worth between €5 billion and €6 billion and conduct business mainly with ship owners in the U.S., Asia and Greece, the source said. CEO Stefan Ermisch is likely to keep his post under the new ownership of the U.S. firms, which plan to sell the German lender's nonperforming loans to other investors, according to the newspaper's sources.

HSH Nordbank, which is poised to report full-year 2017 pretax profit of about €290 million, more than double the amount it recorded in 2016, also plans to reduce its staff to 1,600 from 1,900 by 2019. However, Cerberus and J.C. Flowers are looking at total redundancies of nearly 30%, according to the Feb. 22 report.