GOOD WORK

GOOD FIGURES

Successful for and with our clients, further improvement in our own structures, substantial wind-down of legacy assets and certainty about the privatisation process due to the final EU decision – 2016 was eventful as well as pointing the way for HSH Nordbank . It was a year during which we gave an impressive demonstration of our new operational strength – new business totalling €8.9 billion is no mean feat in a demanding setting. And this was without breaching our own quite strict risk parameters. Which shows: our Core Bank is healthy and full of vitality. In short: Good work – which is why this is the heading of our 2016 annual report.

But of course, we know that although 2016 was an important year, the decisive event will be the change in ownership scheduled for 2018. One thing is clear: in 2017 we will again do all it takes to make the change a success – among other things, by proving just how good HSH Nordbank is at doing their business. Among our clients we stand for competence, reliability and speed – in short: for GOOD WORK.

ROLLING UP OUR SLEEVES FOR ENTREPRENEURS

We are the ‘Bank for entrepreneurs’ – the Bank for people with foresight, passion and initiative. We are where our clients are: in our home region of North Germany, in the metropolitan regions of Germany and in selected foreign locations. Here we offer companies tailor-made finance solutions and assist them with our broad-based sector expertise. HSH Nordbank is one of the leaders in Germany for real estate financing. We are among the top players in Europe when it comes to realising renewable energy projects, while we have a long tradition of expertise in the maritime industry. The Corporate Client business is an important pillar of our Bank, which we aim to strengthen further: through commitment, single-minded determination and reliability. We seek to convince through performance because we are STRONG FOR ENTREPRENEURS.

HSH NORDBANK’S FOUNDATIONS

OPPORTUNITIES UP, RISKS DOWN

CLEARER OUTLOOK FOR THE FUTURE: Following the EU Commission’s final decision in the state aid proceedings, the underlying conditions of the change in owner­ship, scheduled to take place in 2018, have now been set. OPERATIONAL STRENGTH DEM­ONSTRATED: New business worth €8.9 billion demonstrates our competitiveness and shows that our business strategy is working. STRUCTURES FURTHER IMPROVED: We are systematically working to improve our internal structures. Our aim has been to become more reliable, faster and more accurate, all the while maintaining clear cost control. We have succeeded in doing so. LEGACY ASSETS REDUCED: In 2016, we wound down legacy assets amounting to about ten billion euros in EAD (exposure at default), with five billion euros through the portfolio transfer agreed with the EU to the AöR (Anstalt des öffentlichen Rechts, institution under public law) of the federal states. And roughly as much again through our ongoing wind-down programmes.

Our management board

FOUR MEN, ONE FOREWORD

LADIES AND GENTLEMEN, 2016 was marked by further strengthening of our operational business, the final decision in the EU proceedings and preparations for the planned change of ownership in 2018. At the same time, we have systematically improved our internal processes.

To the foreword
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Stefan Ermisch, Chief Executive Officer

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“2016 was a good year for the Bank. We have been successful in making it function more effectively and competitively.”

TARGETS REACHED. KEEP GOING.

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HSH Nordbank closed out 2016 with a Group profit of €121 million. How do you rate the year? Stefan Ermisch: 2016 was a good year for the Bank. This is not only due to the fact that we can be pleased with our result as a whole. More importantly, perhaps, we have managed to make the Bank as a whole more effective and more competitive. What does this mean specifically? Stefan Ermisch: The work of a bank now needs to be efficient, fast, neat and low-cost. This is something we have been working on for years; it’s an ongoing process. Those who don’t stay with it get ruled out. The competition in our industry is very tough. Hence permanent improvement and change are fundamental requirements for success. At the same time, we have shown that our Core Bank is able to hold up excellently in a heavily contested market, not only in our northern German home region but also beyond. This is an important message that is reflected in the results: in 2016, our Core Bank generated earnings before taxes of €639 million. This good result was possible only because our colleagues worked with a great deal of commitment. All in all, we laid the foundations for long-term success in 2016. How did new business go? Stefan Ermisch: All told, we concluded new business with a volume of €8.9 billion and are thus on a par with last year’s strong figure – but this time with a smaller team. The existing volume in the Core Bank remained largely constant in 2016: the Corporate Clients business area generated 14.2, Real Estate Clients 12.5 and Shipping 7 billion euros. What impact did the emphasis on focal industries have on new business? Stefan Ermisch: A consistently positive one. In many areas, we continued to expand or consolidate our position in the market. In the real estate segment, we generated new business worth €4.6 billion and thus slightly exceeded the the previous year’s strong figure. Here we are among the top 3 in Germany. In our Corporate Clients business area, we increased new business by 20 per cent to €3.8 billion. In renewable energies, we are among the top 5 in Europe; our new business in this area in 2016 was well in excess of €1 billion. May 2016 saw the EU’s final decision in the state aid proceedings. A change in ownership is planned by the end of February 2018. What does this mean for the Bank? Stefan Ermisch: We see this major change as an opportunity. The banking sector is undergoing fundamental change. The industry has to deal not only with strict regulatory requirements, but also with the strain resulting from the setting of low interest rates. At the same time, traditional business models need to be transposed to the digital world. New owners will understand the opportunities that this setting offers and make bold use of them. On top of this with HSH, they will be able to take possession of a bank well established in the market with an excellent organisational structure. But just so we can get this right: the sale scheduled for 2018 is being managed by the federal states of Hamburg and Schleswig-Holstein. But of course, we as the Bank will support them to the best of our ability. Is the Bank to be sold as a whole? Stefan Ermisch: That is the aim. But syndicates may also be formed. Who might be interested in HSH Nordbank? Stefan Ermisch: At present, investors have the opportunity to acquire a well-established commercial bank in a region and country with a strong economy. This Bank provides future and growth prospects. Of course, investors will take a very close look because it is not every day that such an offer comes up. For us, it is important not to let up in our day-to-day operations – quite the opposite. We must continue to honour our service promise to the market and to our clients on an everyday basis. And that is what we will do. Our colleagues have always demonstrated their ability to not only keep on top of business in turbulent times, but also to rise to peak form. We stand for the ability to handle new challenges successfully time and time again. The Core Bank is profitable, but the new owners also have to contend with the Non-Core Bank. Stefan Ermisch: That’s true. Even though we have made genuinely good progress when it comes to reducing our legacy assets, past mistakes made pre-2009 continue to weigh very heavily, particularly so because the shipping sector has been in the throes of a historical crisis ever since. Furthermore, the guarantee dating from 2009 defines very narrow limits for economic scope for action. Both these factors weigh on us. The entire shipping sector is severely shaken. This is hitting us very hard – like all banks exposed to shipping. Put simply, the Non-Core Bank pools the past mistakes in the form of non-performing loans that to date have been wound down insufficiently, due also to the guarantee. This is not ideal; nevertheless, all parties involved have a duty to find a good solution to these problems in the course of privatisation. We know this, the owners know this, the EU Commission knows this, as does the European Central Bank. Are there any parties interested in non-performing loans? Stefan Ermisch: Yes, they are investors who have specialised in the liquidation of critical portfolios. They take on risks and hope for promising returns. Given the fact that the shipping market has hit absolute rock bottom, this may be a good time to enter it. But these investors have certain prices in mind. Here, it will be important to find an economically feasible path for all involved. Everyone will have to push themselves to their limit to achieve a good result. I am confident that this will be possible.

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€639 million

Core Bank pre-tax income

Oliver Gatzke, Chief Financial Officer

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“We gain transparency and speed. The integrated sight offers a better basis for decision-making.”

The transparent Bank.

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The regulatory requirements for banks tightened substantially in the wake of the financial crisis. What does this mean for the management of our Bank? Oliver Gatzke: One main difference is that we no longer look at and manage income, costs, risks, liquidity and capital separately from each other. Now there is an integrated performance and risk management approach. We have a uniform view on all financial, risk and business data. Although this entails considerable effort, it also results in significantly greater transparency. We thus meet our own management requirements as well as those of national and European regulatory authorities. This is designed to avoid a repeat of what happened during the financial markets crisis, when the financial institutions under stress conditions were not always able to manage their risk exposures appropriately. What does this management approach mean specifically? Oliver Gatzke: We work on the basis of the principle of a ‘transparent bank’. This means that we meet the management requirements and the many different regulat­ory requirements of the European Central Bank and the national regulatory authorities from a single, central data platform. This is a key point, as it allows us to manage all processes from a single source. This way of working combines the entire IT with the strategic management, the business presentation, the accounting and reporting of our Bank. What this means in practical terms is that we are able to obtain financial and risk figures, for example on equity, liquidity or asset quality, virtually in real time and in many cases to pass them on to the management team and the regulatory authorities as part of an automated process, with speed and transparency.  Do the changes in bank management provide opportunities for our Company? Oliver Gatzke: Yes, because we will not only become more transparent, but also faster. Also, this integrated view provides a substantially better basis for making decisions. This means that it contributes to solutions that are viable in the long term as well as being forward-looking. Why is data procurement and data preparation in the banking business, in particular, so complex? Oliver Gatzke: The complexity is due to the fact that banks have their eye on three control sets. First, the external accounting data for the balance sheet and preparation of the income statement. Secondly, we report in depth on the business areas, client relationships and individual transactions managed by internal accounting. And finally, there is the supervisory law view of risk and, in tandem with this, the liquidity and capital position. Data from all control sets needs to be brought together. This is most successful if all control sets are fed from the same data platform, as is the case with our Company.

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Ulrik Lackschewitz, Chief Risk Officer

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“By integrating the Restructuring Unit, there are now uniform processes and credit standards. Everything interlocks.“

A Clear Picture.

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Effective 1 November 2016, the former Restruc­turing Unit (RU) was integrated into the Risk department that you manage. Why? Ulrik Lackschewitz: The RU was virtually a bank within the Bank, with its own processes, own procedures. There may have been reasons for this structure at the time this unit was set up. But over the long term and in the current situation it was not suitable because it provided no integrated view of the risks. This is something we changed. Integration of what is now the Non-Core Bank means that there are now uniform processes and lending standards; everything is now connected. What has changed as a result of the integration? Ulrik Lackschewitz: Previously, the RU, which by the way did good work, handled everything: analysis, advisory and processing. Now the tasks have been separated: analysis is handled by Credit Risk Management under Jan Lührs-Behncke. The Special Loan Management unit of Jan Erik Groß is responsible for assisting exposures. We no longer have a situation where some colleagues perform analysis and advisory at the same time. This clear separation was also important from MaRisk aspects. All told, this was a major restructuring and one we completed well internally – among other things thanks to the flexibility and strong commitment of our colleagues. How are we dealing with the loans, most of which are non-performing, that are bundled together in the Non-Core Bank? Ulrik Lackschewitz: We have made major progress when it comes to winding down non-performing loans. We achieved this thanks to our professional management of these portfolios. In some cases, we restructured exposures while in others, we sold off portfolios. All in all, we wound down around ten billion euros (EAD) in this way. We transferred five billion euros to the AöR of the federal states and reduced a further sum of around five billion euros in our day-to-day business. This wind-down process continues; it also includes the sale of our market portfolio. What does the pooling of non-performing loans in the Non-Core Bank mean for relationships with our clients? Ulrik Lackschewitz: We are consistently speaking with one voice. All this leads to more exacting access to our clients. I expect this approach to yield major benefits.

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€10 BILLION

(EAD) IN LEGACY ASSETS WOUND DOWN

Torsten Temp, Management Board member for Markets

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“The clients honour our good performance – we perceive this by the feedback in talks.”

EXCELLENT TEAM EFFORT, STRONG WILL TO SELL.

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The market units can look back on 2016 as a good year. What was the decisive factor in this success? Torsten Temp: We are now characterised by the fact that we provide excellent team service and have a strong will to sell – even under demanding conditions. In 2016, the leadership within the sales department changed and I am now the sole person responsible. And there was the final EU decision in the state aid proceedings, after which we began preparations for the selling process. For the Bank the change in ownership is an opportunity. From a pure sales perspective, however, such changes are usually not an ideal starting point. Nevertheless, we not only achieved, but even exceeded the results we targeted for 2016. And new business worth about €8.9 billion is a strong performance. Our good results are especially gratifying because we had a weak start to 2016. I enjoyed following the catch-up charge. All in all, you are looking at a satisfied head of sales – something you don’t see very often. What do companies today expect from their bank? Torsten Temp: The most important issues are speed, competence in the structuring of a loan and reliability. Clients take a good product selection as a given. Our aim is to provide our clients with something akin to a one-stop shop. Are you succeeding? Torsten Temp: I think so, otherwise we would not have gained more than one hundred new clients in the Corporate Clients business area alone. Our clients are rewarding our good performance – this is the feedback we are receiving in conversations. It is also demonstrated by our client surveys. Interest rates are low at the moment, while commodity prices and currencies are fluctuating considerably. How important is it to help clients minimise uncertainty factors? Torsten Temp: For years we have successfully been working to improve the interplay between client relation­ship managers and product specialists from the capital market. As a result, our clients can hedge interest rates and currencies straightforwardly for their benefit – and we improve our cross-selling ratio. Many banks have recently discovered the German SME sector for themselves. What does this mean for HSH Nordbank? Torsten Temp: The German SME sector has been highly competitive among banks for decades, so this in principle is nothing new. But in the past two years a few non-German banks have joined the fray, quite aggressively, because their home markets tend to still be rather affected by the crisis. Does tougher competition mean that banks are prepared to accept greater risks in order to get a look-in? Torsten Temp: In some areas that is certainly what we are seeing. But we do not do unreasonable business. We apply clear, strict risk standards. And we stick to them. Over the long term this is the right strategy.

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Business units

Real Estate Clients

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DC Developments GmbH & Co. KG

Art comes from expertise. Developing high-quality real estate is an art that Hamburg-based company DC Developments has mastered to perfection. For the past ten years the project development company has realised buildings that have generated a great deal of enthusiasm through their architecture, location and quality. Indispensable building blocks: the individual wishes of owners and users, striving for innovation and an eye for details. Be they residential, real estate, office or commercial buildings; hotels or neighbourhood developments, the 40 staff at DC Developments are passionate about creating values that enrich the environment and the cityscape.

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DC Developments GmbH & Co. KG

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Art comes from expertise. Developing high-quality real estate is an art that Hamburg-based company DC Developments has mastered to perfection. For the past ten years the project development company has realised buildings that have generated a great deal of enthusiasm through their architecture, location and quality. Indispensable building blocks: the individual wishes of owners and users, striving for innovation and an eye for details. Be they residential, real estate, office or commercial buildings; hotels or neighbourhood developments, the 40 staff at DC Developments are passionate about creating values that enrich the environment and the cityscape. “With the ‘KPTN’ we are developing a mixed-use neighbourhood in Hamburg’s most recent district, which will enthuse not only the HafenCity residents but also any visitors. Many companies from our city are on board with the realisation of the entire project and it is no coincidence that HSH Nordbank is our financing partner,” said Lothar Schubert, Managing Director of DC Developments GmbH & Co. KG. “The HSH team has experience of handling complex project developments of this size; it is very familiar with its home market and has convinced us with its Hanseatic courtesy many times before.”

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TACKLING ISSUES is the ORDER OF THE DAY

Peter Axmann, Head of Real Estate Clients

STRONG FOR ENTREPRENEURS

REAL ESTATE CLIENTS

UNDERSTAND It takes expertise and experience to correctly assess the potential of a location or a property.

RECOGNISE As one of the leading banks specialising in real estate, we set up tailored finance in close collaboration with you: from the project idea through to disbursement.

SHAPE Rely on one of the top names: together we will lay foundations you can absolutely trust.

GERMANY: AN ATTRACTIVE REAL ESTATE LOCATION

TRANSPARENT, FAST, COURTEOUS – with specialist knowledge, experience and well-functioning processes we have advanced to an excellent position in CRE financing in Germany and are among the major providers of finance. We are successful not only in our northern German home region, but also in other German federal states where we have in the past established ourselves with offices in Berlin, Düsseldorf, Frankfurt, Stuttgart and Munich.

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GERMANY: AN ATTRACTIVE REAL ESTATE LOCATION

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TRANSPARENT, FAST, COURTEOUS –with specialist knowledge, experience and well-functioning processes we have advanced to an excellent position in CRE financing in Germany and are among the major providers of finance. We are successful not only in our northern German home region, but also in other German federal states where we have in the past established ourselves with offices in Berlin, Düsseldorf, Frankfurt, Stuttgart and Munich. Moreover, we assist foreign investors in their transactions on the German real estate market. For them, in particular, Germany is viewed as an especially solid market that promises stability even in unsettled times and thus provides auspicious investment opportunities. Our clients include, in particular, professional real estate investors, project developers and development companies. We offer them tailored financing solutions that are geared to their business plan. Our clients appreciate not only the transaction security we provide, but also our solution-oriented way of working – right from the initiation of business and over the entire loan term. Our range of services includes traditional mortgage loans as well as structured financing for existing properties, commercial project developments and residential property development projects. We always have the sector cycle firmly in our sights and pay particular attention to ensuring that risks are manageable and predictable – such caution is important to ensure long-term success.

Loan portfolio by region

(31/12/2016) in %, Core Bank

Loan portfolio by property type

(31/12/2016) in %, Core Bank

€4.6 BILLION

OF NEW BUSINESS IN 2016

€12.5 BILLION
LOAN PORTFOLIO

THE MARKET IN A NUTSHELL

Real estate in Germany has been in high investor demand for years. With a volume of more than €53 billion, 2016 was once again among the richest in transactions on the commercial real estate markets. The drivers of this vigorous upturn are the low interest rates and the substantially better economic performance in Germany compared to other countries since the economic crisis of 2008/09. Both domestic and international investors are looking for opportunities to invest their money at a profit. In this process, flourishing real estate markets promising high rental and value growth are sought after. Thanks also to the positive trend of the job market over the past few years, big German cities, in particular, are perceived as being attractive.

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THE MARKET IN A NUTSHELL

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Real estate in Germanyhas been in high investor demand for years. With a volume of more than €53 billion, 2016 was once again among the richest in transactions on the commercial real estate markets. The drivers of this vigorous upturn are the low interest rates and the substantially better economic performance in Germany compared to other countries since the economic crisis of 2008/09. Both domestic and international investors are looking for opportunities to invest their money at a profit. In this process, flourishing real estate markets promising high rental and value growth are sought after. Thanks also to the positive trend of the job market over the past few years, big German cities, in particular, are perceived as being attractive. While the number of those out of work has fallen by 18 per cent since 2009, the number of those employed in office jobs has risen by about ten per cent. Population numbers have also grown by around six per cent while the purchasing power of private households is up by just under 17 per cent. All this prompted foreign retail chains to move to prime locations in German cities because they hope for growth prospects outside their often stagnating home markets. The positive sales trend in turn benefits the booming online retail trade, which in itself entails the extensive build-up of logistics centres. Investors have moreover shown heightened interest in hotel properties because the mounting political uncertainty in some countries is making Germany more attractive as a holiday destination. All these factors have led to a sharp rise in real estate prices in Germany. Nevertheless, investor demand remains high, also because real estate remains attractive due to the lack of other investment opportunities that promise high returns. This goes not only for office and commercial real estate, which is always sought-after by institutional investors, but increasingly also for logistics, hotel and residential real estate. It is due solely to the stable economic setting that investors and developers will probably continue to keep an eye on the German real estate markets over the coming years. Source: HSH Nordbank Research

CORPORATE CLIENTS

Patrick Miljes, Head of Corporate Clients

OUR WORK IS PAYING OFF

WE CAN SEE THIS IN THE RESULTS that rate the realignment of the Corporate Client business area and the strengthening of sales as being profitable. Thus we increased new business in 2016 by around 20 per cent over the previous year to about €3.8 billion. We achieved this because we gained around 100 new clients – not only in our northern German core region, but also in other strong economic regions such as the Rhineland and south-west Germany.

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OUR WORK IS PAYING OFF

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WE CAN SEE THIS IN THE RESULTS that rate the realignment of the Corporate Client business area and the strengthening of sales as being profitable. Thus we increased new business in 2016 by around 20 per cent over the previous year to about €3.8 billion. We achieved this because we gained around 100 new clients – not only in our northern German core region, but also in other strong economic regions such as the Rhineland and south-west Germany. Given the persistently competitive market setting, we can be proud of these successes – they are the result of our systematic work. Work that we are continuing. Our specialists advise and support their clients with in-depth knowledge; especially in the focal sectors of Energy & Utilities, Infrastructure & Logistics, Industry & Services, Healthcare, Food Industry & Trade and Wealth Management, Structured Finance and M&A. Thanks to this broad range of deep knowledge, we are able to develop solutions together with our clients that fit in perfectly with their business. And it takes competence, flexibility, speed and reliability to offer these solutions – characteristics that our clients appreciate. And with which we will continue to be successful in 2017.

3.8 billion euros

NEW BUSINESS

About 20%
increase on previous year

Loan portfolio by segment

(31/12/2016) in %, Core Bank

Energy & Infrastructure

Lars Quandel, Head of department, Energy and Infrastructure

Working together for a new energy system

In the renewables sector, we are among the top 5 European finance providers and thus in the premier league. We see the fact that even in 2016 we were able to exceed our ambitious new business targets as an incentive to remain at the top over the coming years. In 2016, our new business exceeded  €1 BILLION FOR THE FIRST TIME. In the projects business we are active across Europe in the asset classes of ‘wind on­shore’, ‘wind offshore’, ‘solar’ and ‘hydroelectric power’. “Every year we set out to do still more and every year achieved still more, We intend to and will accomplish that in 2017 as well”, Lars Quandel, Head of Energy & Infrastructure feels certain.

ENERGY & UTILITIES

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European Energy A/S

The Danish project developer and operator of solar and wind farms also offers the technical and commercial management of the farms. Since the company’s establishment in 2004, European Energy A/S has developed a total of 65 wind farms and 29 solar projects in six different European countries. All plants together have a total rated output of around 800 megawatts (MW). The investment costs for the project total more than one billion euros. European Energy developed the biggest solar park in northern Europe at a decommissioned air force site in southern Denmark, where 300,000 photovoltaic modules on an area of around 108 hectares generate nominal output of 50.4 MW. CEO Knud-Erik Andersen: “In HSH Nordbank we have found a financing partner who understands our particular needs as a project developer and assists us across national borders in a professional manner and with a great deal of expertise.”

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That’s how we work

Matthias Munninger, Energy & Utilities, Client Relationship Manager and KNUD-ERIK ANDERSEN, CEO EUROPEAN ENERGY A/S

STRONG FOR ENTREPRENEURS

ENERGY & UTILITIES

UNDERSTAND The markets are characterised by technical, legal and structural changes.

RECOGNISE You can depend on our experience as pioneers in the sector and on our keen sense for trends. We will deploy our expertise and comprehensive financial solutions in the execution of your projects.

SHAPE Whether your business is a utility focusing on solar, hydro or wind, offshore or onshore, we support you with all our energy.

RENEW ENERGIES. WRITE A SUCCESS STORY.

We have been financing wind and solar projectsfor the past 25 years and thus rank among the pioneers in this sector. It is precisely for this reason that our clients – producers, project developers, investors and utilities – benefit from our know-how that is recognised in the market and from our wealth of experience. Our existing loan portfolio currently has a volume of around five billion euros and comprises some 240 projects.

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RENEW ENERGIES. WRITE A SUCCESS STORY.

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We have been financing wind and solar projectsfor the past 25 years and thus rank among the pioneers in this sector. It is precisely for this reason that our clients – producers, project developers, investors and utilities – benefit from our know-how that is recognised in the market and from our wealth of experience. Our existing loan portfolio currently has a volume of around five billion euros and comprises some 240 projects. We offer our clients long-term project finance as well as working capital lines, liquidity management and various products to manage risks. We support them in import and export business and offer them services in conjunction with the sale and purchase of projects and shareholdings. Our expertise in this area is documented regularly in various publications – our tenth Wind Study was recently published on the occasion of the WindEnergy Hamburg Fair (September 2016). Matthias Munninger, Senior Vice President, Energy & Utilities: “Denmark provides fundamentally favourable conditions for photovoltaic projects. European Energy has the advantage of comprehensive, local expertise and many years of experience. This project was important to us. We thereby succeeded in entering the market and gaining further projects in Denmark.”

Loan portfolio by segment

(31/12/2016) in %, Core Bank

Loan portfolio by region

(31/12/2016) in %, Core Bank

240

PROJECTS

About 5 billion euros
portfolio of existing loans

THE MARKET IN A NUTSHELL

The expansion of renewable energies (RE) continues to progress apace in Europe – particularly thanks to the boost provided by the Paris UN Climate Agreement of 2015 and the commitments made by the EU for the period up to 2030. According to industry association WindEurope, 86 per cent of all pow­er plant capacity newly installed in 2016 within the EU was based on RE technology.

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THE MARKET IN A NUTSHELL

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The expansion of renewable energies (RE) continues to progress apace in Europe – particularly thanks to the boost provided by the Paris UN Climate Agreement of 2015 and the commitments made by the EU for the period up to 2030. According to industry association WindEurope, 86 per cent of all pow­er plant capacity newly installed in 2016 within the EU was based on RE technology. The increase in wind energy plants accounted for an aggregate rated capacity of 12.5 gigawatts (GW) or around 51 per cent of the total increase in capacity. A further 27 per cent (6.7 GW) was contributed by photovoltaic plants. As in the previous year, Germany was by far the biggest sub-market in Europe for new wind farms, both onshore and offshore, with a capacity increase of 5.4 GW. Capacity growth was one of the main factors in renewable energies now accounting for just under 30 per cent of electricity consumption in the EU. The increase in RE power plant capacity is likely to continue over the long term, but will have to be interlinked to a greater extent with the expansion of the power grid. Although growth will weaken in individual markets, the further expansion of renewable energies will now make it possible to achieve the substitution of climate-damaging fossil fuels that is envisaged over the long term. National development schemes and expansion plans offer project developers and investors in the EU countries sufficiently reliable underlying conditions to push ahead with the capacity increase over the coming years – despite the move towards capacity auctions with amounts of remuneration that are to be established through competition. Source: Research HSH Nordbank

INFRASTRUCTURE & LOGISTICS

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RAILPOOL

RAILPOOL is among the biggest lessors of rolling stock in Europe. Most recently, we signed a lighthouse transaction for our long-standing client and for DB Cargo AG through the bilateral financing of around 200 second-hand locomotives. As part of the transaction, DB Cargo AG sells the used electric locomotives to a consortium led by RAILPOOL, with Toshiba and others also participating. In return, DB Cargo AG will be able to use the rolling stock for a period of eight years as part of a capacity reduction model. Through this tailored financing with a volume of a high eight-digit euro amount, HSH Nordbank is assuming a pioneering role on the competitive rail market.

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RAILPOOL

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RAILPOOL is among the biggest lessors of rolling stock in Europe. Most recently, we signed a lighthouse transaction for our long-standing client and for DB Cargo AG through the bilateral financing of around 200 second-hand locomotives. As part of the transaction, DB Cargo AG sells the used electric locomotives to a consortium led by RAILPOOL, with Toshiba and others also participating. In return, DB Cargo AG will be able to use the rolling stock for a period of eight years as part of a capacity reduction model. Through this tailored financing with a volume of a high eight-digit euro amount, HSH Nordbank is assuming a pioneering role on the competitive rail market. At the same time, this transaction enables RAILPOOL to as­sume a clear strategic positioning on the market. RAILPOOL was established in 2008 as a joint venture between HSH Nordbank and KfW IPEX Bank; the Munich-based company now has operations in 20 European countries. Following the successful development phase the company passed into the hands of the private equity fund of Oaktree Capital Management in 2014. GIC, a major investment fund in Singapore, now also holds an equity stake. In addition, the founding banks have involved further reputable European banking firms in the financing as part of the expansion of RAILPOOL. Torsten Lehnert, Managing Director of RAILPOOL: “A special kind of partnership connects us with HSH Nordbank – together we have decisively shaped the locomotive leasing market.”

85CDE874-1097-409B-9C03-3003F16649A9

WE GIVE IT A PUSH

Britta Kanzelmeyer, Infrastructure & Logistics, Client Relationship Manager, and Torsten Lehnert, Managing Director of RAILPOOL

STRONG FOR ENTREPRENEURS

INFRASTRUCTURE & LOGISTICS

UNDERSTAND The pace of this globalised world needs flexible logistics chains and a reliable infrastructure.

RECOGNISE Our extensive experience allows us to support you when it comes to investing, hedging economic risks or executing your payments.

SHAPE From transport management on road and rail, from the airport through to the harbour terminal, together we set the course for the success of your enterprise.

THE CONNECTION HAS BEEN ESTABLISHED!

FINANCING, DONE WELL. From a locomotive weighing tons to the last byte – we ensure connection. Be it in road or rail-based transport, supply companies and supply networks or energy and telecommunications. With innovative financing solutions for data centres, smart meter and broadband projects we are a sought-after contact partner for financing.

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THE CONNECTION HAS BEEN ESTABLISHED!

85CDE874-1097-409B-9C03-3003F16649A9

FINANCING, DONE WELL.From a locomotive weighing tons to the last byte – we ensure connection. Be it in road or rail-based transport, supply companies and supply networks or energy and telecommunications. With innovative financing solutions for data centres, smart meter and broadband projects we are a sought-after contact partner for financing. The financing of infrastructure projects on the European market – they are of our focus and the core area within which our experienced team is able to offer attractive solutions to our clients. For instance, in greater Berlin we helped more than 100,000 households connect to the German fibre-optic network in 2016. Going beyond project financing, we assist clients with company finance as a sector specialist with a wealth of detailed knowledge and long-standing experience in the areas of logistics, locomotive and coach manufacture as well as building construction. At the same time, we assist our clients in the financing of plants and projects right from the start – be it in the selection of the investment, the offer as part of a concession, a bidding procedure right through to successful completion.

Loan portfolio by segment

(31/12/2016) in %, Core Bank

Loan portfolio by region

(31/12/2016) in %, Core Bank

MORE THAN 100,000

HOUSEHOLDS CONNECTED TO THE GERMAN FIBRE-OPTIC NETWORK

THE MARKET IN A NUTSHELL

Logistics is one of the most important areas of Germany’s economy. It includes the transport of goods, their storage and the management of goods and information flows. And although global growth has slowed down, the logistics sector is continuing to increase. In this sector, which is dominated by SMEs, around 60,000 companies offer their logistical services. This is due, not least, to the booming online trade and the increasing service offerings of e-commerce providers. According to the German Logistics Association (Bundesvereinigung Logistik, BVL), cross-sector sales in 2016 came to around €258 billion – equivalent to more than 25 per cent of the European logistics market.

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THE MARKET IN A NUTSHELL

85CDE874-1097-409B-9C03-3003F16649A9

Logistics is one of the most important areas of Germany’s economy. It includes the transport of goods, their storage and the management of goods and information flows. And although global growth has slowed down, the logistics sector is continuing to increase. In this sector, which is dominated by SMEs, around 60,000 companies offer their logistical services. This is due, not least, to the booming online trade and the increasing service offerings of e-commerce providers. According to the German Logistics Association (Bundesvereinigung Logistik, BVL), cross-sector sales in 2016 came to around €258 billion – equivalent to more than 25 per cent of the European logistics market. This is due to the high competitiveness of domestic logistics companies, Germany’s good geo-strategic position and the quality of the German transport infrastructure. Regular public-sector and private investments in roads, tunnels, bridges, railways, ports and airports are necessary in order to maintain these standards. Accordingly, the German government has been using its good budget situation to ramp up infrastructure spending considerably. Spending totalling €13.7 billion is planned for 2017. Compared to 2014, this is equivalent to an increase by more than one-third. Further substantial spending is planned beyond 2018. The projects of the German Plan for Federal Traffic Routes 2030 alone are worth more than €67 billion. The Hamburg metropolitan region will also be able to benefit. For example, the harbour link road for the A1 and A7 motorways is due to be expanded, as well as linking these two motorways in the south of Hamburg. Together with the deepening of the river Elbe and the widening of the Kiel Canal, this will create the basis for an enduring dynamic growth of the northern German economy.

TRADE

TRADE? DOING DEALS!

Jens Thiele, trade, team leader

STRONG FOR ENTREPRENEURS

TRADE

UNDERSTAND The market for food products is constantly on the move because of changing consumer behaviour, vigorous innovation and fierce competition.

RECOGNISE Whether brands, white labels, production or trading: we know the challenges and opportunities of the business models and will do our bit to help you achieve your objectives.

SHAPE No matter where the market is heading: our sector experts feed you with fresh ideas so that you can realise yours.

Markus Prante, customer service representative, Trade and Hans Redlefsen, Owner of Closed

WE TRADE CHALLENGES

Of course, trade has always been a core business area for us. It would be difficult for it to be otherwise for a company with one head office in Hamburg. In this area we assist our clients in their business activities. Be it in such sub-sectors as Oil and Gas, Steel, Chemicals, Textiles, Automotive or in areas of Retail.

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WE TRADE CHALLENGES

85CDE874-1097-409B-9C03-3003F16649A9

Of course, trade has always been a core business area for us. It would be difficult for it to be otherwise for a company with one head office in Hamburg. In this area we assist our clients in their business activities. Be it in such sub-sectors as Oil and Gas, Steel, Chemicals, Textiles, Automotive or in areas of Retail. Our financing volume in this area totals €3.2 billion and is thus €500 million up on the previous year. Trade financing is transacted mostly in foreign currency. Of course, we offer our clients the necessary currency transactions and currency hedging. The same goes for risk hedging in import and export business. Our clients today face a wide range of different challenges: currency volatility, international procurement, collection cycles, internationalisation and verticalisation. The development of own brands is another important and challenging topic. We assist our clients in finding solutions to these challenges – in the face of intense competitive pressure on global markets undergoing profound changes as a result of the shift in sales from bricks-and-mortar to online trading. Moreover, the pressure to adapt will increase further with the progress of digitalisation. This makes our specialists with their market expertise not only perfect contact persons for our clients – but also forward-looking partners.

€3.2 BILLION

TOTAL FINANCING VOLUME

€500 MILLION
MORE THAN IN THE PREVIOUS YEAR

THE MARKET IN A NUTSHELL

Trade companies have played a major role in ensuring that Germany is a winner of the international division of labour and that it generated new record levels of exports and imports in 2016, as it had done in the previous year. In 2016, goods worth €1,207.5 billion were exported along with imports totalling €954.6 billion. This is equivalent to an increase of 1.2 per cent and 0.6 per cent, respectively, over 2015. Germany’s most important trading partner is China (just under €170 billion in imports and exports) followed by France (about €167 billion) and the USA (almost €165 billion). Given the encouraging economic setting, exports and imports are likely to continue their growth in 2017.

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THE MARKET IN A NUTSHELL

85CDE874-1097-409B-9C03-3003F16649A9

Trade companies have played a major role inensuring that Germany is a winner of the international division of labour and that it generated new record levels of exports and imports in 2016, as it had done in the previous year. In 2016, goods worth €1,207.5 billion were exported along with imports totalling €954.6 billion. This is equivalent to an increase of 1.2 per cent and 0.6 per cent, respectively, over 2015. Germany’s most important trading partner is China (just under €170 billion in imports and exports) followed by France (about €167 billion) and the USA (almost €165 billion). Given the encouraging economic setting, exports and imports are likely to continue their growth in 2017. At the same time, according to the German Federation of Wholesale, Foreign Trade and Services (Bundesverband Großhandel, Außenhandel, Dienstleistungen e. V., BGA for short) wholesale sales recorded a minor decline from €1,120 billion to €1,112 billion in 2016. This decline is an expression of a trend observed over the past three years, that as prices are down slightly companies have to sell more products in order to maintain their high sales levels. The BGA is slightly more optimistic for 2017 and projects marginal sales growth of around 0.5 per cent. In Hamburg and the northern German coastal cities, wholesale and foreign trade are traditionally an important economic factor. At present, around 18,650 companies operate in this sector. They generated sales of more than €292 billion with a total staff of 248,500. In the fourth quarter of 2016 alone, sales according to the Confederation of northern German Wholesale, Foreign Trade and Service Businesses (Norddeutscher Unternehmensverband Großhandel, Außenhandel, Dienstleistung e. V., AGA for short) rose by 1.1 per cent. The trade companies also project a positive trend for 2017. Thus many northern German companies stated their intention in the AGA Economic Test at the end of 2016 to invest and recruit new employees in 2017 – making a further rise in sales appear likely. Source: Research HSH Nordbank

FOOD INDUSTRY

HOW DO YOU WITHSTAND PRESSURE? WITH QUALITY.

Ute Brettschneider, Food Industry, Client Relationship Manager

STRONG FOR ENTREPRENEURS

FOOD INDUSTRY

UNDERSTAND The market for food products is constantly on the move because of changing consumer behaviour, vigorous innovation and fierce competition.

RECOGNISE Whether brands, white labels, production or trading: we know the challenges and opportunities of the business models and will do our bit to help you achieve your objectives.

SHAPE No matter where the market is heading: our sector experts feed you with fresh ideas so that you can realise yours.

EXPERTISE BEATS COMPLEXITY

The food industry is multifaceted and diverse. It therefore requires a high level of know-how: among producers, traders and banks. Thanks to the expertise we have built up over the past decades, our advisors are not only very familiar with the challenges and specific characteristics of the individual markets – they are also very well connected in these markets. Thus our Food team currently assists more than 170 clients with a total loan volume of €2.2 billion, equivalent to a ten per cent increase over the previous year. Among other things, we are active in the coffee and tea industries, in agriculture and the meat industry.

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EXPERTISE BEATS COMPLEXITY

85CDE874-1097-409B-9C03-3003F16649A9

The food industry is multifaceted and diverse.It therefore requires a high level of know-how: among producers, traders and banks. Thanks to the expertise we have built up over the past decades, our advisors are not only very familiar with the challenges and specific characteristics of the individual markets – they are also very well connected in these markets. Thus our Food team currently assists more than 170 clients with a total loan volume of €2.2 billion, equivalent to a ten per cent increase over the previous year. Among other things, we are active in the coffee and tea industries, in agriculture and the meat industry. Here, we work together with companies that represent enjoyment and life’s pleasures for consumers and are well-managed on a hotly contested market – assisted accordingly by the bank partner. The entire industry is marked by such trends as ultra-fresh food, increasing nutritional awareness and product sustainability. At the same time, companies’ operations are becoming increasingly international: even now they sell around one-third of their products abroad. Our service portfolio includes not only company finance but also the processing of domestic and foreign payments and the reliable execution of international documentary transactions. Of course, we also provide the right hedging instruments when it comes to forex transactions in international trade and in imports and exports in foreign currency.

COFFEE

Germans drink more coffee than mineral water. The annual per-capita consumption totals around 162 litres. This makes Germany the world’s third-biggest market for coffee after the USA and Brazil as well as the main trans­shipment centre for green coffee in Europe. Annual sales of the German coffee industry total around €6.1 billion. Demand in Germany for higher-quality coffee varieties has been growing for some years. At the same time, the proportion of the “full bean” segment and of single-cup coffee is rising sharply. Pods currently account for around 5.5 per cent of the overall market. Consequently, the markets are anything but steady. This volatility makes increasingly efficient risk management necessary. Green coffee traders, in particular, require considerable scope with their liquidity to hedge the sharply fluctuating coffee prices on the commodities exchanges. We offer our clients hedging of currencies, commodity prices and interest rates.

In summary, it can be said that the complexity of coffee trading is increasing and thus the financing requirements of our clients are as well. Climate change, population growth and ever scarcer cultivation areas mean considerable uncertainty for the future of the coffee industry. At the same time, coffee trade provides good opportunities for opening up new markets outside Europe. We help our clients master all these challenges.

MORE THAN 170 CLIENTS

are currently being accompanied by our food industry team

2.2 billion euros
total credit volume

THE MARKET IN A NUTSHELL

The food industry is the third-largest sector of the German economy –offering consumers a broad range of 170,000 high-quality products. In 2015, around 570,000 employees in approx. 5,800 companies generated sales in excess of €169 billion. The most important segments are the meat and meat products industry, dairy processing, confectionery and baked goods, drinks production and the processing of fruit and vegetables. The food industry is marked by SMEs to a particularly high extent: 95 per cent of companies have fewer than 250 employees. Business in the food industry is virtually unaffected by economic fluctuation and has been showing a relatively stable performance. Nevertheless, the sector is marked by huge margin pressure due to overcapacity and the heavy consolidation within the German food retail industry.

Strict cost management, the opening up of new markets and product innovations are therefore at the top of the agenda for the companies. The most prom­ising strategy for outperforming the competition is thus for a company to position itself as an innovative brand and quality producer. Many companies are focusing on current trends such as freshness, convenience, regionality, increased nutritional awareness and sustainability. According to the Confederation of the German Food Industry (Bundevereinigung der Deutschen Ernährungsindustrie, BVE), sales in 2016 were up following a decline in the previous year: forecasts anticipate a gain of around 1 per cent in 2016. The growth was attributable not least to the export business, which the companies hope will lead to a strong surge in 2017 as well. Source: Research HSH Nordbank

INDUSTRY & SERVICES

WE ARE STRENGTHENING THE BACKBONE OF THE ECONOMY

Christian Alpert, Industry & Services, Department Manager

STRONG FOR ENTREPRENEURS

INDUSTRY & SERVICES

UNDERSTAND Companies in the industrial and services sectors form the backbone of the German economy.

RECOGNISE We are familiar with the specific challenges of your market – from automotive to steel, from R&D through to the travel business.

SHAPE Cooperating with you, we develop distinct ideas and inch-perfect solutions so you can take profitable advantage of the opportunities your business presents.

Frank Kraemer, Industry & Services, Client Relationship Manager

WE CREATE STRUCTURE FOR PROGRESS

WHETHER EXPANSION, strategic partnership, capital market financing or arranging promissory notes – we assist our clients as expert advisors even in complex projects. For us, sustainable cooperation in a spirit of partnership is the top priority. For this reason, we stand by them over the long term through all economic cycles and are thus able to develop tailored structures. And it is precisely with these individual solutions that we guarantee that our clients remain successful in the complex interplay between globalisation, structural change and technological progress. And this not only in our northern German core region, but also nationwide: whether in Hanover, Berlin or Düsseldorf, in Munich or Stuttgart, where we have now been active for more than ten years. In Bavaria and Baden-Württemberg alone we currently assist more than 100 selected SME clients with a loan volume of around one billion euros. And we also have exposure to Germany’s most important sector, the automotive industry, with a financing volume of one billion euros.

WITH AROUND €1 BILLION

LOAN VOLUME WE ASSIST

MORE THAN 100
SME CLIENTS IN BAVARIA AND BADEN-WÜRTTEMBERG

HEALTHCARE

HEALTH COMES FIRST

Sandro von Korff, Healthcare, Team Leader

STRONG FOR ENTREPRENEURS

HEALTHCARE

UNDERSTAND The healthcare sector is a growth market of steadily increasing importance to society as a whole.

RECOGNISE While the medical sector and technol­ogy continue to develop, systemic cost pressure is also mounting. We help you navigate the conflicting priorities involving investment, acquisitions and other complex plans.

SHAPE Medical technology, hospitals or care, spe­cialised service providers or pharmaceuticals, together we ensure that you are fit for your future.

WE’RE THERE EVERY STEP OF THE WAY

VIRTUALLY NO OTHER SECTOR is reporting steady growth comparable to that of the healthcare industry. Around 230,000 mostly SMEs now account for some twelve per cent of Germany’s gross domestic product (GDP). While the medical sector and technology continue to develop, cost pressure for businesses is mounting at the same time. The main challenges are thus: increasing industrialisation, digitalisation and networking. And what does the client expect from us? Competence, expertise and reliability – characteristics we are able to offer. Our clients include companies from the medical technology and pharmaceuticals sectors, specialised service providers, associations of accredited physicians and dental healthcare providers, healthcare insurance funds and association

We are also one of the main providers of finance for clinics and care facilities in Germany. Across the country, we have financed around 130 in-patient care facilities with a total of 12,000 beds. Our long-standing activity in the healthcare sector has made us genuine sector specialists: client relationship managers, risk specialists, product experts and researchers are thus not only experts in a highly complex area of work – but also competent contact partners who always work out a suitable solution for their clients.

130 in-patient care facilities

with 12,000 places financed nationwide

1.2 billion euros
loan portfolio

THE MARKET IN A NUTSHELL

The German population is ageing. And thus the issue of healthcare is becoming increasingly important not only for our society – but also for the economy. After all, total German healthcare spending in 2015 already came to €344 billion or €4,213 per capita. This is equivalent to 11.3 per cent of Germany’s gross domestic product – one in every nine euros in Germany is thus spent on health.

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THE MARKET IN A NUTSHELL

85CDE874-1097-409B-9C03-3003F16649A9

The German population is ageing.And thus the issue of healthcare is becoming increasingly important not only for our society – but also for the economy. After all, total German healthcare spending in 2015 already came to €344 billion or €4,213 per capita. This is equivalent to 11.3 per cent of Germany’s gross domestic product – one in every nine euros in Germany is thus spent on health. The issue of health will continue to ensure strong growth and employment stimuli in the healthcare industry: over the past ten years, gross added value has grown by 3.3 per cent annually while growth of the German economy as a whole was only 1.6 per cent. Between 2004 and 2015, the number of those in gainful employment in the healthcare industry rose from 4.4 million to more than five million. And the demographic trends show that the momentum of the healthcare industry will not wane. We are increasingly faced with the exciting challenge of not only maintaining the quality of healthcare, but of improving it: by always striking an intelligent balance between humanitarian and economic aspects. Source: Research HSH Nordbank

Wealth Management

MANAGING ASSETS

Nico Hamm, Wealth Management, Department Manager

STRONG FOR ENTREPRENEURS

Wealth Management

UNDERSTAND Every asset is unique.

RECOGNISE It is our responsibility to find the right solution for your personal requirement.

SHAPE When you feel confident that your assets are in good hands, today and tomorrow, then we feel we have done our job.

ESTABLISHING TRUST

IN SUPPORTING high-net-worth private clients and foundations with our wealth management we are one of the leading banks in our northern German core region. As a bank for entrepreneurs we assist our clients not only in all business-related matters, but also at a private level. Relations with private clients or foundations often stretch back over many decades and there is a reason for this: dependability, transparency and solidity are principles we have always upheld. Our relationship managers and specialists in wealth management offer a wide range of services. In the interest of our clients, the advice we give is independent of both products and providers. Our work focuses on individual investment advice and asset management.

Our clients have confidence in our expertise: overall, we have around four billion euros in assets under management. This says something not only about our size, but also about the confidence our clients have in us. We are also one of the leading banks in Germany when it comes to the area of philanthropy and foundations. Our specialists are trained foundation managers or consultants and support our clients on all relevant topics from strategic advice and setting up foundations down to fundraising or donation optimisation. This profound knowledge is appreciated by our clients. And this is why we advise 700 foundations and non-profit partnerships across Germany.

About 700

foundations and charitable collaborations are advised by us nationwide
www.neues-stiften.de

Structured Finance

That’s how we work

Roland Schwab, Structured Finance, Department Manager

STRONG FOR ENTREPRENEURS

Structured Finance

UNDERSTAND The financing of any project depends on the sector, the business model, the market situation and the right timing.

RECOGNISE At the interface between conventional corporate banking and investment banking we support you with our expertise in the (re-)structuring of debt and equity capital, financing your current assets and funding your acquisition.

SHAPE We solve these complex tasks in an all-round, tailor-made, efficient manner. In this way we create a stable financing structure for your project.

STRUCTURED. Stable. SENSIBLE.

OUR REORGANISED STRUCTURED FINANCE DEPARTMENT combines the Leveraged Finance (LBO) team for private equity investors with the Capital Structuring unit, which has supported the corporate client advisors on more complex financing structures in the past. Our range of services is complement­ed by our Smart Fact colleagues, formerly in the Capital Markets unit, who offer factoring solutions. This unit therefore covers all the main forms of financing required by corporate clients. We structure financing solutions for leveraged buy-outs (LBOs) for German SMEs with annual revenues in excess of €50 million as well as for private equity companies. Unlike conventional corporate finance, for such transactions extensive due diligences – these are intensive checks conducted prior to the sale of a company – are drawn up and detailed legal documentation created, tailor-made for the financing.

We also help clients improve their balance sheet structure. Sometimes there are a large number of individual agreements on the liabilities side – which we tackle together, for example by improving the maturity structure or setting up a new syndicate structure to ensure that the client is stably financed over the long term. The usual size of the financing tranche we take on stands at around €20 to 40 million and in individual cases up to €75 million. Our principal product in Capital Structuring is the syndicated loan in the form of term loans, guarantees or working capital facilities. Here we structure the financing, i. e. the content, depending on the client’s situation and the respective reason for the financing – for example, investment in material goods, financing working capital or a takeover.

mergers & acquisitions

FIRST LEADING TOGETHER

Karsten Maschler, M&A, Department Manager

STRONG FOR ENTREPRENEURS

M&A Consulting

UNDERSTAND We offer the network and the detailed expertise to promote your entrepreneurial interests and create strategic added value.

RECOGNISE In a close dialogue we provide you with ideas on how you can better position yourself given the current market and competitive situation in your sector.

SHAPE Whether for a sale or a takeover, a merger or a shareholding – we help you successfully prepare your company for the future.

THEN BRINGING TOGETHER

SALE OF THE COMPANY, joint ventures, buying a business, acquiring a stake, raising growth capital or arranging succession – no matter which entrepreneurial project is planned: our specialists in mergers & acquisitions (M&A) help clients implement it successfully. With more than 120 transactions successfully completed in the past 15 years, we are among the established M&A consultants in the German market. In 2016 too, we were entrusted with numerous interesting mandates. Here we are able to draw not only on our profound knowledge of the market, but also on our excellent national and international network – consisting of strategic investors, private equity funds, family offices and external advisors. This is because in order to find a buyer, a co-investor or a suitable target company for clients, a thoroughgoing knowledge of the market with all its opportunities and risks is required – as well as an excellent and skilful command of all the financing options. A successful M&A project is therefore always a demonstration of a job well and properly done.

Since 2002, we have worked mainly for SMEs, where we serve a multi-faceted client portfolio – from owner-managed companies to international conglomerates. The core industries for our M&A consulting are retail and food, industry and services, healthcare, shipping and energy & utilities as well as logistics & infrastructure. So no matter what challenges our clients are facing: thanks to our sector expertise we offer realistic options and a perfect strategy for long-term profitable action.

WITH MORE THAN 120

TRANSACTIONS SUCCESSFULLY COMPLETED IN THE PAST 15 YEARS, we are AMONG THE ESTABLISHED M&A CONSULTANTS IN THE GERMAN MARKET

Shipping

Christian Nieswandt, Head of Shipping

THE CONSOLIDATION PROCESS IS ONGOING

The shipping industry is going through one of the severest and longest crises in its history. What role does shipping play at HSH Nordbank? Christian Nieswandt: Shipping is still one of HSH Nordbank’s core business areas. However, in the current extremely challenging market setting we only engage selectively in new business. At the same time, we are resolutely reducing our legacy assets. Almost all of these relate to exposures from before 2009. Overall, our holdings in the shipping business area will continue to decline.

DEMANDING IN DEMANDING MARKETS

Christian Nieswandt, Head of Shipping

STRONG FOR ENTREPRENEURS

Shipping

UNDERSTAND To achieve lasting success for your business in the maritime industry you need a business model that has a future.

RECOGNISE In us you will find a team that stays the course. Even when those storms come.

SHAPE Our promise is that we will scrutinise deals down to the fine details; we will weigh up opportunities and we will offer you the kind of support you need.

What do you pay particular attention to in shipping transactions? Christian Nieswandt: We focus on developing and diversifying our portfolio by means of German and foreign exposures with good credit ratings, sufficient equity capital and a successful business model. Among other things, this means that the borrower constantly has good access to the cargo and that his fleet is reliable and engaged on attractive terms. At the moment, we see greater opportunities in the tanker and bulker market than in the container market. However, we are not only active in the market as a lender, but also as an arranger and offer our clients other products from our Bank that are useful to them. We are becoming increasingly successful at this. Do you expect the markets to pick up significantly? Christian Nieswandt: Probably not in the short term because a considerable number of new ships are due for delivery in the coming twelve months. This is likely to make a recovery of the markets more difficult. However, noticeably fewer orders were placed in 2016 – that is a positive sign. In spite of all these problems, there is one thing we should not forget: the demand for transport capacity is increasing in line with the growth of global trade. And well over 90 per cent of these international transports make use of ships – this type of goods transfer cannot be replaced. This points to sound business prospects in this area over the long term. What changes do you anticipate in the shipping market as a whole? Christian Nieswandt: The process of consolidation is ongoing and has advanced particularly far among the shipping lines. A similar process is now necessary for the tramp shipping companies to restore balance in the market. We are therefore supporting alliances and utilisation pools.

Loan portfolio by segment

(31/12/2016) in %, Core Bank

Loan portfolio by region

(31/12/2016) in %, Core Bank

Treasury & Markets

Mark Bussmann, Head of Treasury & Markets

NEW STRUCTURE, NEW EFFICIENCY

The Bank restructured the Treasury & Markets unit in 2016 – and in doing so further increased its efficiency. This involves a wide range of tasks. In the so-called ‘Markets’ function, for example, we develop and sell products for risk and investment management as well as capital market finance. In other words, we offer savings banks, institutional investors and companies instruments for hedging interest and exchange rate risks as well as structured bonds, certificates and products for investing in the money and capital market.

ACTING EFFICIENTLY. FINANCING COOPERATIVELY.

Furthermore, corporate clients receive suitable solutions for actively managing their own equity capital and liquidity position. In addition to this, we arrange large-volume promissory notes for the public sector, thus contributing to the financing of the federal states and municipalities. Another important task of this unit is the Bank’s entire op­erational treasury function. Here we not only play a leading role in funding the Bank across the entire liabilities side – but also in the management of the Bank’s daily liquidity.

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ACTING EFFICIENTLY. FINANCING COOPERATIVELY.

85CDE874-1097-409B-9C03-3003F16649A9

The Bank restructured the Treasury & Markets unit in 2016 –and in doing so further increased its efficiency. This involves a wide range of tasks. In the so-called ‘Markets’ function, for example, we develop and sell products for risk and investment management as well as capital market finance. In other words, we offer savings banks, institutional investors and companies instruments for hedging interest and exchange rate risks as well as structured bonds, certificates and products for investing in the money and capital market. Furthermore, corporate clients receive suitable solutions for actively managing their own equity capital and liquidity position. In addition to this, we arrange large-volume promissory notes for the public sector, thus contributing to the financing of the federal states and municipalities. Another important task of this unit is the Bank’s entire op­erational treasury function. Here we not only play a leading role in funding the Bank across the entire liabilities side – but also in the management of the Bank’s daily liquidity. In doing so, at Treasury & Markets we always see ourselves as service providers and partners for all HSH Nordbank business units – and work with them hand in hand. HIGHLIGHTS FROM OUR RANGE OF SERVICES: • Collaboration with more than 300 savings banks in Germany • Placement of bonds and Landesschatzanweisungen with a total volume of more than €6 billion for the public sector • Issue of promissory notes from 2013 until today more than sextupled at €1.6 billion • Placement of several benchmark bonds Assistance • Funding support for nine federal states • for several solar and wind energy companies with combined interest and exchange rate hedges in non-euro countries • Risk calculation for companies in our Enterprise Risk Management concept (ERM) • Creation and implementation of dynamic hedging concepts with our clients in the food industry • Successful support for real estate companies in sector-specific interest rate risk strategy

Capital market products

(31.12.2016) in %

Transaction Banking

INVESTMENT for innovation

THE WORK IN A COMPANY’S ENGINE ROOM has to run smoothly: the daily management of liquidity, continuous cash flow optimisation and the comprehensive hedging of risks are some of the main tasks in this respect. Our Transaction Banking unit takes care of these tasks, meeting our clients’ demands with a number of products: these may relate to a range of possibilities for global payments, the financing and hedging of international delivery transactions or interest and exchange rate risks. In addition, we offer various digital solutions, which we have developed with the “Initiative Digital Business”.

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INVESTMENT for innovation

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THE WORK IN A COMPANY’S ENGINE ROOMhas to run smoothly: the daily management of liquidity, continuous cash flow optimisation and the comprehensive hedging of risks are some of the main tasks in this respect. Our Transaction Banking unit takes care of these tasks, meeting our clients’ demands with a number of products: these may relate to a range of possibilities for global payments, the financing and hedging of international delivery transactions or interest and exchange rate risks. In addition, we offer various digital solutions, which we have developed with the “Initiative Digital Business”. For example, in PAYONE we work with a company in the Savings Banks Finance Group, which offers internet shop operators an optimum solution for their payment transactions. The range of services offered by the leading payment service provider covers the assumption of risk management as well as debtor and receivables management and billing. With the support of the paydirect internet payment procedure, we also offer our clients the possibility of electronic payment – with secure payment ensured. The range of services we offer is always tailor-made for our clients, with clearly defined sector focuses. For instance, in the real estate business we see ourselves as providers of not only property finance, but also all-round solutions. Together with PROMOS consult Projektmanagement, Organisation und Service GmbH we have developed a service for optimising the recording of rent payments. The HSH PROMOS Cash Connection offers significant savings in time and costs for housing companies. “HSH Nordbank has been one of our company’s banks for many years. With the HSH PROMOS Cash Connection it has added an important tool to its service that helps us efficiently allocate and book our rental receipts,” says Ulrike Bondkirch, Head of Group Finance and Treasury at Hamburger TAG Immobilien AG, which manages some 80,000 properties. Furthermore, we offer our clients international trade financing. Here, among other things, we support project planners from the renewables sector by providing suitable solutions for procurement. The classic hedging function of import L/Cs and the financing function give our clients the opportunity to conclude contracts with suppliers ahead of long-term project financing. This makes it possible to bridge the construction phase until the project financing is paid. At the same time, we deal with issues of the future, e. g. Blockchain, a technology that some people think is going to change the world. However, as yet there are not many practical applications. Yet we have already developed a proof of concept for promissory note loans on a Blockchain. At the moment, we are looking into how individual solution platforms can be developed from this together with institutional investors and banking partners.

That’s how we work

Yoram Matalon, Head of Transaction Banking

The organisational units Documentary Business, Cash Management Opera­tions and Customer Service Centre have been certified as meeting the requirements of ISO 9001:2008 for a quality management system

STRONG FOR ENTREPRENEURS

Transaction Banking

UNDERSTAND The importance of reliable cash management and global trade finance is growing in an accelerating and digital economy.

RECOGNISE With certified processes, we offer total care for all your national and international payments and hedge risks in import and export trading.

SHAPE Our dedicated, scalable solutions allow you to have an overview of your liquidity and payments at all times, leaving you free to focus fully on your core business.

Cross-selling products Transaction Banking

Net commission income by segment (31/12/2016) in %

Perspectives

Dr. Cyrus de la Rubia, Chief Economist

Research MEETS PRACTICE

We are confident and assertive and say: HSH Nordbank’s sector and macroeconomic Research unit. Close to the client, close to the market – and with sufficient distance to form a balanced judgement. In our Research unit our clients find sparring partners, who, with their knowledge, experience and flexibility, rapidly understand complex economic correlations, enabling them to assess the opportunities and risks of business models. In their studies on the subject of wind energy, real estate, infrastructure, healthcare, trade and the food sector our experts analyse not just individual markets, but also look forward and plot future developments. In close cooperation with the market units, Research provides support for loan arrangements and, for example, for promissory notes. A further offer for our clients: generating a rating indication. Companies without a rating can thereby find out without obligation what rating they would be given if they were to contact one of the major rating agencies.

THE OPPOSITE OF SCIENCE IN AN IVORY TOWER?

In addition to these services clearly geared to companies, our Chief Economist Dr Cyrus de la Rubia and his team deal with current economic and political trends, which they assess and classify. They develop scenarios showing possible trends. Thus they provide decision-making aids, which are used by our market units – be it corporate clients, real estate, shipping, energy or others. And of course they are used by our clients. Whether the questions relate to interest rates, currencies, the performance of the German economy or Bitcoin: our team of macro and micro-economists provides expert advice – and in conjunction with our relationship managers create real added value for our clients.

Professor Peer Steinbrück, German Federal Minister, retired

THE DIRECTION FOR SMES: UP

We are strong partners for SMEs with expertise and commitment for all matters relating to finance – and beyond. With our initiative “Unternehmer Positionen Nord”, or UP° for short, we support our SME clients with comprehensive, up-to-the-minute information at www.unternehmerpositionen.de and regularly at events – always with a clear focus on entrepreneurs and their view of things.

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PROBLEM LOANS REDUCED

We have combined all loan portfolios that no longer form part of our core business and are in large part non-performing in our Non-Core Bank. These holdings, most of which originate from before 2009, are largely covered by the guarantee provided by our federal state owners. We are resolutely winding down these problematic legacy portfolios – many of which stem from the Shipping business – in a manner that minimises losses as far as possible.

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Judith Steinhoff, Head of Human Resources

CORPORATE RESPONSIBILITY

EMPLOYEES. Well trained, motivated and with individual strengths: when it comes to our staff, we know what we can count on. Accordingly, modern HR work has high priority at HSH Nordbank. We provide specific support as well as individual basic and advanced training. We make use of our internal seminar programme to teach specific, specialist content and offer training courses, among other things on communication, methodology and leadership skills.

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Our social responsibility

SUCCESS CANNOT BE MEASURED JUST BY NUMBERS – of that we are firmly convinced. That is why we as a bank also live up to our social responsibility. We promote important social activities where we bring different people together – be it during the Kieler Woche international sailing event, the Schleswig-Holstein Music Festival, with the Elbphilharmonie Hamburg foundation or with the HSH Nordbank Run in Hamburg’s HafenCity. At the same time, we support the Herz As (Ace of Hearts) initiative in Hamburg and the Hempels association in Kiel, both of which work with the homeless and socially disadvantaged. Furthermore, since 2015 we have collaborated with the Hamburg branch of the German Child Protection Association in the integration of refugee families. We do all this not only because we consider it our duty or because we think it is the right thing to do, but also because we enjoy doing so.

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