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STATE AID : COMMISSION EXAMINES HSH NORDBANK GUARANTEE.

On 21 June, the European Commission provisionally approved the restoring of the guarantee provided by the regions of Hamburg and Schleswig-Holstein (Germany) in favour of HSH Nordbank from 7 billion to the original framework of 10 billion. The restoring of the guarantee framework to its former level by its majority shareholders will ensure that the bank has adequate capital ratios against the background of increased demands on the capital base and the ongoing crisis in shipping markets. The Commission's approval is provisional pending a final decision.

At the same time, the Commission has opened an in-depth investigation to assess whether the measure is in line with EU state aid rules. The Commission notes that it has doubts about whether, given the changed market circumstances, the restoring of the guarantee is still covered by its earlier decision and whether it is appropriate. The bank's and the guarantors' financial situation will now be as if the partial cancellations of the guarantee had not taken place.

HSH Nordbank is approximately 85% owned by the state governments of Hamburg and Schleswig-Holstein. The German savings association Sparkassen- und Giroverband Schleswig Holstein and nine trusts held by US private equity investor JC Flowers hold the remaining shares.

In September 2011, the Commission approved restructuring aid, whereby HSH Nordbank was granted a risk shield of 10 billion by the regions of Hamburg and Schleswig Holstein. The risk shield was subsequently reduced to 7 billion.

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Publication:European Report
Date:Jun 24, 2013
Words:237
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