Our History

1992 – 2014: SHIP FINANCING BY Hamburg Commercial Bank (Formerly HSH NORDBANK AG)

Hamburg Commercial Bank (formerly HSH Nordbank AG) financed 253 vessels built between 1992 and 2014. These form the portfolio later transferred and correspond to a balance of receivables more than 5 billion euros.

2008: SHIPPING CRISIS

The Baltic Dry Index, a price index published by the Baltic Exchange in London for global bulk shipping, dropped by almost 12,000 points to about to 700 points between May and December 2008. The resulting crisis affected all shipping markets and led to industry-wide financing difficulties.

2009: RESCUE PACKAGE BY SCHLESWIG-HOLSTEIN AND HAMBURG FOR Hamburg Commercial Bank (ForMerly HSH NORDBANK AG)

Hamburg Commercial Bank (formerly HSH Nordbank AG) is shored up by means of the purchase of shares and assumption of guarantees up to an amount of 10 billion euros. This guarantee is a risk shield, which means that the bank itself has to bear the losses up to a maximum amount of 3.2 billion euros, only then does the liability of the federal states take effect.

2012 – 2014: CONTINUATION OF THE SHIPPING CRISIS

Banks begin to back out of financing ships and are forced to make substantial provisions for risks on existing exposures. In 2013, more than 100 ships financed by german shipping funds have to declare insolvency. By 2014, more than 450 shipping funds are insolvent, with losses amounting up to 10 billion euros.

2015: EU STATE AID PROCEDURE

In 2011, Hamburg Commercial Bank (formerly HSH Nordbank AG) had reduced the guarantee framework from 10 to 7 billion euros to economise on premium payments. This step was premature. The further increase in the guarantee sum triggers the second EU state aid procedure in 2015. An agreement between the EU and Germany provides on the one hand for the split-up of Hamburg Commercial Bank (formerly HSH Nordbank AG) and its privatization. On the other hand, this agreement opens up the possibility of transferring a portfolio with an EaD volume of up to 6.2 billion euros to the Federal States. A tranche of 4.1 billion euros transfered to portfoliomanagement represents the states portfolio.

22 DECEMBer 2015: FOUNDATION OF THE BAD BANK

portfoliomanagement acquires the States’ portfolio, relieving the Hamburg Commercial Bank’s (formerly HSH Nordbank AG) bank balance sheet for the forthcoming sale process. The objective is a reduction of the states’ portfolio in a value-preserving manner.

30 JunE 2016: ECONOMIC TRANSFER OF THE SHIP PORTFOLIO TO THE BAD BANK

Receivables in the amount of 4.1 billion euros are acquired at a purchase price of 2.4 billion euros as set by the EU. The purchase price is reviewed by an external auditing firm.

annual Report 2016: Setting Up the public law Institution successfully completed and regular Business launched

portfoliomanagement focused on establishing and setting itself up as a public law Institution and taking over and magaging the credit Portfolio during the 2016 financial year. As a result of the ongoing crisis in the shipping markets and the continuing decline in market Prices and charter rates, it was necessary to downgrade the credit portfolio by EUR 522 Million. The updated carrying amount in the Portfolio therefore amounted to EUR 1, 898 Billion on the balance sheet reporting date. Accounts payable towards banks fell from EUR 2,623 billion to EUR 2,352 billion on 31 December 2016 despite an increase in foreign exchange rates on balance.

21 November 2017: successful repayment of the bridging loan in 2017

portfoliomanagement took out a bridging loan on the money markets when it launched its operational business in June 2016. portfoliomanagement was able to completely repay the bridging loan, which originally amounted to USD 2.87 billion, in three tranches by 21 November 2017.

Annual Report 2017: first successful reductions in the first full financial year

portfoliomanagement was able to reduce the outstanding credit amount in the troubled ship financing portfolio by almost 14 percent to a figure of EUR 3,856 million and the accounts receivable with customers by almost 20 percent to a figure of EUR 1,643 million during the first full financial year. As a result, the carrying amount arising from the cut in loans was reduced by EUR 193 million and the portfolio declined, as security was no longer provided for 37 vessels. This meant initial success in reducing the figures, even during the set-up phase!

Annual Report 2018: positive annual result In Fiscal year 2018

The outstanding loan amount as of 31 December 2018 was EUR 3.67 billion, the carrying amount was EUR 1.48 billion. The year-on-year decline (loan amount: EUR -187 million; carrying amount: EUR -164 million) was mainly due to principal payments and proceeds. We started financial year 2019 with 173 ships serving as collateral, which represents a decrease of 41 in the past financial year. A total of 80 ships have been removed from the portfolio since portfoliomanagement was established. This reduction is a very gratifying validation of our work and of our strategy of keeping as many projects as possible in the Portfolio for the time being and winding them up when the time is right.

Today: RESTRUCTURING AND REDUCTION

Most exposures are in payment default. The team of portfoliomanagement works on the restructuring and realignement of the acquired ship financings. In this process, a change of business partners, charterers or shipping companies and the consolidation (“pooling”) of ships is verified. The portfolio is gradually being reduced.

You will find the most frequently asked questions here.

WHAT WERE THE CONDITIONS FOR THE FURTHER INCREASE IN THE RISK SHIELD IN FAVOUR OF HAMBURG COMMERCIAL BANK (FORMERLY HSH NORDBANK AG)?

Following intense negotiations, the European Commission and the German authorities agreed on a solution which firstly provides for a split-up of the bank into a holding company taking over most of the remuneration components of the loss guarantee and into an operating company continuing the current business of the bank. Secondly, the operating company will afterwards be privatized in an open, transparent and non-discriminatory tendering procedure. The company to be sold will be restructured to the effect that a successful selling process in view of the privatization is facilitated. The sales proceeds will initially be used to settle the claims of the German Federal States for the guarantee remuneration. The Commission will evaluate the new company emerging from the selling process in a follow-up decision. In the event that the selling process fails, the Bank will have to cease acquiring new business and manage its assets in a way serving its liquidation.