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Reports: German savings banks write off value of stakes in troubled NordLB

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Reports: German savings banks write off value of stakes in troubled NordLB

Savings bank associations in the states of Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania will write off the value of their stakes in state-owned lender Norddeutsche Landesbank Girozentrale, according to German media reports.

The savings banks in Lower Saxony, the second-largest NordLB shareholder with a stake of 26.4%, will book their holdings as zero for 2018, which corresponds to a total write-off of €400 million, Börsen-Zeitung reported Jan. 9.

The savings banks in the state of Saxony-Anhalt, holding a 5.3% stake, and those in Mecklenburg-Western Pomerania, with a stake of 3.7%, are also considering writing off the value of their holdings, Handelsblatt reported Jan. 10, citing the association of eastern German savings banks OSV. The exact amount of the write-off was not disclosed.

Burdened by billions in nonperforming shipping loans, NordLB expects to post a loss for 2018. The bank has been struggling to keep itself afloat since 2016, when it started racking up loan loss provisions on its rapidly souring shipping book. NordLB is in need of fresh capital as well and is in talks with several private investors about a potential stake sale. The ECB has urged for a deal to be closed by April, when NordLB plans to release its 2018 financial report.

NordLB is majority owned by the state of Lower Saxony, which holds a stake of 59.1% in the lender. The state of Saxony-Anhalt holds 5.6% of the bank.