HSH Nordbank has passed the Europe-wide stress test

Associations, Banking, Company Profiles, Finance, News, Reports, Shipfinance — By on October 26, 2014 at 11:56 AM

 

Constantin von Oesterreich

Constantin von Oesterreich

  • CET1 after AQR amounts to 10.0 percent plus a buffer of 2.3 percentage points
  • CET1 after AQR and stress test amounts to 6.1 percent
  • Result shows the Bank’s capital strength

HAMBURG/KIEL HSH Nordbank has passed the joint stress test conducted by the European Central Bank (ECB) and the European Banking Authority (EBA) for system-relevant banks in the euro zone thanks to its solid capital base. In the balance sheet check, the Asset Quality Review (AQR), which formed the basis for the subsequent stress test, the Bank showed strong results. HSH Nordbank’s Core Equity Tier 1 capital ratio (CET1) in the AQR of 10.0 percent, plus the 2.3 percent buffer from the capital protection clause, comfortably exceeds the required minimum ratio of 8.0 percent. In the overall stress test result, which based on the AQR assumes a hypothetical extreme scenario in the years 2014-2016, HSH Nordbank’s CET1 comes to 6.1 percent. Here the minimum ratio was 5.5 percent. The replenishment of the guarantee from EUR 7 to 10 billion by the federal states of Hamburg and Schleswig-Holstein in summer 2013 made a substantial contribution to this.

The ECB has thus confirmed that HSH Nordbank has a solid capital base in the present setting. In addition to this, the Bank is able to withstand the hypothetical assumptions in the extreme scenario of the stress test such as a deep recession, further huge charges and major shocks in the global economy.

“This positive result is important for HSH Nordbank, our clients and the entire workforce.
We are now looking clearly to the future. In the context of the ongoing EU state aid proceedings we will continue to deal with the strategic and structural challenges in a focused manner, ” said Constantin von Oesterreich, Chairman of the Management Board of HSH Nordbank.

The CET1 in the AQR was calculated by independent auditors on behalf of the ECB after a detailed audit of the loan portfolios, especially in the shipping sector. Although the lumpsum valuation discounts on the discounted cash flows were much larger than those of all other asset classes, HSH Nordbank already proved its capital strength in the AQR.

“The AQR demonstrates the Bank’s good risk-bearing ability. With a Core Equity Tier 1 capital ratio of more than 12 percent HSH Nordbank shows a sound value. Our resolute balance-sheet management and the guarantee provided by the federal states have proven their worth, ” said Constantin von Oesterreich.

BALANCE-SHEET MANAGEMENT AND WIND-DOWN OF LEGACY PORTFOLIO TAKING HOLD

For the Management Board the HSH Nordbank’s positive results in the AQR and stress test are a confirmation of its strategy. “We initiated decisive steps to stabilise the Bank in the longer term by strengthening our capital position at an early stage, with the progress made in winding down our legacy portfolio and resolute cost management. We intend to continue resolutely along this path. All this is being done with the support of and in consultation with our shareholders, ” said Stefan Ermisch, HSH Nordbank’s Chief Financial Officer.

The Comprehensive Assessment by the ECB consisted of two main elements, the AQR and the stress test. The assessment is mainly regulatory in character and from today’s perspec tive has no material impact on HSH Nordbank’s 2014 income statement. At the end of the 1st half of 2014 HSH Nordbank posted a pre-tax profit of EUR 432 million (pre-year period: EUR 137 million). Group net income after taxes rose to EUR 301 million (pre-year period: EUR 130 million).

 

 

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