Hamburg Commercial Bank (formerly HSH Nordbank) is a commercial bank in northern Europe with headquarters in Hamburg as well as Kiel, Germany. It is active in corporate and private banking. Considered to be the world's largest provider of maritime finance,Jack Ewing (December 4, 2012), Global Shipping Industry's Troubles Are Threat for Biggest German Banks New York Times. its main focus is on shipping, transportation, real estate and renewable energy. The bank is one of the pioneers in the pan-European project financing of renewable energies and is also involved in the expansion of digital infrastructure.
In 2022, the bank won the "World's Best Bank Transformation" award by Euromoney trade magazine. For the third year in a row, The bank was awarded as "Best Performing Bank" in Germany by The Banker.
The bank changed its name from HSH Nordbank to Hamburg Commercial Bank (HCOB) on February 4, 2019, after the bank was sold to new owners in 2018. HCOB has foreign offices in Athens and other operations in Luxembourg and London.
HSH Nordbank, then HCOB has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and as a consequence is directly supervised by the European Central Bank.
History
Early beginnings HSH Nordbank was created as a result of a merger between Hamburgische Landesbank and Landesbank Schleswig-Holstein on June 2, 2003. In the course of the merger HSH was transformed into a joint-stock company (Aktiengesellschaft) and thereby formally privatised, i.e. the bank is not anymore governed by public law.Subject: NN 71/2005 – Capital increase HSH Nordbank AG, Germany European Commission. In 2003, the bank had a balance sheet total of 172 billion euros and employed 4,500 people.
In 2006, HSH Nordbank pledged to seek an unprecedented stock market listing, edging out its chief executive Alexander Stuhlmann to prepare the way.Ivar Simensen (August 16, 2006), HSH edges out chief to make way for IPO Financial Times. Shortly after, WestLB agreed to sell its 26.6 per cent stake in HSH Nordbank to a consortium of five institutional investors,Meike Schreiber and Ivar Simensen (August 31, 2006), International banks share in HSH stake Financial Times. led by J.C. Flowers & Co., for 1.25 billion euros.Ivar Simensen (August 30, 2006), Private equity buys stake in HSH Nordbank Financial Times. Flowers had competed with three investors – Cerberus Capital Management, Hellman & Friedman, and Corsair Capital – for the stake.Meike Schreiber, Tim Bartz and Sven Clausen (August 3, 2006), Flowers plots Europe initiative Financial Times. The investment marked the first part-privatisation of a Landesbank and its experience was being closely watched as an indicator of how difficult it would be for others to prise open the state-controlled sector.James Wilson (May 20, 2008), Flowers to inject €300m into HSH Nordbank Financial Times. By 2008, J.C. Flowers injected about 300 million euros of fresh equity, in spite of the bank's failure to have an initial public offering that year.
2008 financial crisis Similarly to peers such as NORD/LB, Commerzbank, Deutsche Hypothekenbank and KfW, HSH Nordbank buckled under excessive risk-taking prior to the 2008 financial crisis, when it had sought to expand beyond its roots as a regional lender to companies and savings banks into global capital markets.Nicholas Brautlecht, Nicholas Comfort and Steven Arons (January 26, 2017), China Not Europe May Salvage HSH as German Bank Looks East Bloomberg News. It had done so in anticipation of the expiry of a rule that allowed for generous refinancing of German state-backed banks.Klaus Lauer (April 25, 2018), HSH to post pretax loss of about 400 mln euros – sources Reuters. With the beginning of the crisis, HSH had to report losses on their credit investment portfolio. In September 2008 HSH Nordbank announced further writedowns. As a direct consequence the CEO Hans Berger stepped down and in the following weeks HSH announced restructuring. Branches in Copenhagen and Hong Kong were reduced to representations and new business was focused on the core region in northern Germany.
In December 2008, HSH Nordbank was granted to issue up to 30 billion euros guaranteed notes under the German SoFFin program. One requirement that was imposed on HSH was to raise the capital ratio to at least 8%. On January 20, 2009, 3 billion euros 3-year guaranteed notes were issued. On February 24, 2009, HSH received new capital of EUR 3 billion and credit guarantees of 10 billion euros by the two main shareholders, the states of Hamburg and Schleswig-Holstein. The other shareholders, JC Flowers and the Savings Banks Association of Schleswig-Holstein, did not participate in the capital infusion. Together with this increase of its core-capital, HSH announced further restructuring. It planned to spin off non-strategic activities and the toxic asset portfolio into a—yet to be created—bad bank.
In 2008, HSH Nordbank filed a claim with the New York Supreme Court against UBS over losses it says it suffered on a $500 million portfolio of collateralized debt obligations linked to the U.S. mortgage market.Richard Barley (February 26, 2008), HSH says filed CDO suit against UBS Reuters. By 2012, the court found that HSH should have been able to conduct its own due diligence and dismissed the fraud claim, a decision that lawyers interpreted as having broader implications for investors seeking damages for losses incurred during the 2008 financial crisis.Tom Braithwaite and Shahien Nasiripour (March 28, 2012), New York court rejects claim against UBS Financial Times.
On April 9, 2009, president of supervisory board Wolfgang Peiner appointed Freshfields Bruckhaus Deringer to investigate recent management decisions of the Vorstand. On April 17, 2009, the supervisory board of HSH Nordbank relieved Frank Roth, member of the management board of his duties and started pressing criminal charges against him. The bank claims that Roth leaked strictly confidential information to outside parties.
In May 2009 Standard & Poor's downgraded HSH to BBB+.
On October 13, 2009, Norddeutscher Rundfunk reported on a questionable CDO deal codenamed "Omega 55" between HSH Nordbank and BNP Paribas in late 2007, that eventually cost HSH Nordbank 500 million euros. Parts of that deal were not disclosed to the German Federal Financial Supervisory Authority (BaFin).. Omega 55 was a hybrid CDO which exposed HSH Nordbank to the risks of default of other financial institutions including the now bankrupt Lehman Brothers and Washington Mutual. However, also included in the deal were several billion euros of risk tied to HSH Nordbank's own assets. It is alleged that he inclusion of this last element allowed HSH Nordbank to move several billions of risky assets off its balance sheet at year end and avoid costly capital reserves which BaFin would require the bank to post. The assets were repurchased several weeks later after auditors had closed the books of the bank for the year.
In 2012 the Hamburg Public Prosecutors filed charges against six former HSH Nordbank Directors, including the former CEO Dirk Jens Nonnenmacher, in relation to the Omega 55 transaction. The indictment ran to over 600 pages long. They were accused of breach of trust and accounting fraud. The charges were dismissed in 2014. However, that acquittal was overturned by the Federal Court of Justice in October 2016 and a new trial scheduled before the Hamburg District Court. In June 2019, five of the ex-directors settled the charges against them via the "payment of money". The ex-directors had to make individual payments of between 500 thousand and 1.6 million euros to settle the charges.
In 2009, HSH Nordbank had a balance sheet of 174.5 billion euros and reported a loss of 678 million euros.
In 2010, HSH Nordbank was again caught up in scandal. Its CEO, Jens Nonnenmacher, and its General Counsel, Wolfgang Gossman, were accused of planting child pornography on the office computer of the then Head of its New York Branch. The child pornography was planted to give the bank an excuse to fire the branch head. United States prosecutors originally moved against the branch head but rescinded the allegations when certain evidence did not hold up. The bank settled this scandal through a reported settlement of 7 million US dollars after the bank's supervisory board hired law firm WilmerHale to conduct an investigation. The management board of the bank also issued an apology to the former branch head in 2011.
Restructuring and Cum-Ex Scandal 2013–2018 The European Commission, HSH Nordbank and its owners negotiated for years over a plan to restore the bank to health and avoid future state aid.Andreas Kröner and Maria Sheahan (January 23, 2017), HSH Nordbank invites indicative bids from potential buyers Reuters. In September 2011, all sides reached a settlement with the European Commission, ending state aid proceedings in return for tough limits on the size of the bank's balance sheet and a one-off financial penalty of 500 million euros.James Wilson (September 20, 2011), HSH Nordbank overhaul spells end of state aid Financial Times. Under the settlement, the bank was to pull out of asset-backed aviation finance and to limit property finance to its home market by 2014. It also included plans to reduce its staff from 3,300 to 2,100. For 2013, the bank presented its worst set of results since 2008, with an annual net loss close to 800 million euros.Alice Ross (April 8, 2014), HSH Nordbank poised for worst results since 2008 Financial Times.
In 2015, Minister-President Torsten Albig of Schleswig-Holstein and First Mayor of Hamburg Olaf Scholz negotiated a restructuring deal with the European Commission that allowed HSH Nordbank to offload 6.2 billion euros in troubled assets – mainly non-performing ship loans – onto its government majority owners and avoid being shut down, saving around 2,500 jobs.Arno Schuetze and Foo Yun Chee (May 27, 2015), HSH Nordbank strikes rescue deal with EU Reuters. The agreement stipulated that if no private-sector buyer emerged by 2018, HSH Nordbank had to be wound down.Olaf Storbeck (October 24, 2017), Clock ticking on the future of state-owned HSH Nordbank Financial Times.
The European Commission approved a bailout in March 2016 and HSH asked investment bank UBS to find buyers for the loans which were extended to shipping and aircraft companies and for real estate and renewable energy projects.Arno Schuetze (June 8, 2016), HSH Nordbank plans to sell $3.7 bln in bad loans under bailout programme -sources Reuters. In an initial deal, Macquarie Bank and Merrill Lynch bought 800 million euros in aviation loans and 540 million euros in real estate credits, respectively.
In 2013, HSH announced that it was taking provisions of 127 million euros in relation to illegal securities transactions, cum-ex dividend trades, after the findings of an investigatory report by the law firm Clifford Chance. HSH's involvement in cum-ex dividend trades were to follow the bank throughout the years up to 2017
Privatization, Lawsuits and the Return of the Cum-Ex Scandal 2018–2019