German bank agrees $500m Chinese loan deal

By James Wilson in Frankfurt   From: Financial Times
 
HSH Nordbank has agreed a $500m loan facility from China Development Bank and the German bank is in talks with the Chinese state-owned lender over how to further their business ties.


The announcement by HSH Nordbank raises the possibility of closer links with China Development Bank including a strategic partnership, and will lead to speculation about Chinese interest in eventually taking a stake in HSH Nordbank, although such a move is not thought to be under discussion at the moment.


HSH Nordbank is one of the more troubled of the country’s public-sector Landesbanken. It lost billions during the financial crisis with its exposure to structured credits and international property finance as well as the cyclical downturn in shipping and is not expected to be profitable until next year.


Its chief executive has also been embroiled in controversy and is expected to have to step down under pressure from the bank’s majority owners.
However, as a leading financier of global shipping, the Hamburg-based bank may be an interesting partner for China, which in China Cosco has one of the world’s biggest shipping companies.


“Chinese banks have been very focused on their home market. They are considering investments abroad, including Europe, but their interest depends very much on how any investment could support the Chinese economy,” said a banker in Frankfurt.
In a statement on Wednesday, HSH Nordbank said it had signed an agreement with China Development Bank for a $500m facility agreement for a five-year term. The deal would strengthen its dollar-based business, HSH Nordbank said.
The facility was “a good move from HSH Nordbank”, another German banker said of the move.