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Sector associations agree HSH Nordbank's public-to-private transfer

HSH Nordbank AG can transfer to the deposit guarantee scheme of the German private commercial banks association, BdB, from 2022, after a deal was reached with the association of savings banks, Handelsblatt reported Oct. 11.

The transfer was the main barrier to the privatization of HSH Nordbank, which was sold by the states of Hamburg and Schleswig-Holstein to U.S. investment group Cerberus Capital Management LP and other private investors in February. The privatization was requested by the European Commission as a condition for state aid HSH Nordbank received during the financial crisis.

Becoming a private institution meant HSH Nordbank would have to leave the deposit guarantee scheme that covers all state-owned savings banks in Germany. The two associations representing public and private banks had to agree on a way to complete the transfer within the two years during which HSH Nordbank would still be allowed to remain in the public scheme.

There has been a breakthrough in the talks now, BdB's president Hans-Walter Peters told Handelsblatt in an interview. The agreement has paved the way for the privatization of other state-owned banks as well, according to Peters.

"It certainly is a good blueprint for other banks," he said.

A monitoring group at BdB will start following HSH Nordbank's development from 2019 to ensure the bank is in good shape for the transfer due in 2022.

Another German state-owned bank, Norddeutsche Landesbank Girozentrale, is currently looking for investors, including private ones. The lender, owned by the state of Lower Saxony, is in urgent need of fresh capital.