Operational strength demonstrated, Efficiency raised, Legacy assets reduced. Buyers secured.

Client business strengthened, legacy assets reduced, structures further improved – in 2017, we took major steps to set the course for the future. And created the conditions for a successful privatisation: On 28 February 2018, the federal state owners of Hamburg and Schleswig Holstein and the four US private equity investors Cerberus Capital Management, J.C. Flowers, GoldenTree Asset Management and Centaurus Capital as well as Austria’s BAWAG-Bank agreed on the sale of HSH Nordbank. We have thus bought ourselves an entry ticket for the future. In previous years, we had already been in constant motion and continued to improve. But we know: to succeed as a private bank in the future we need to pick up further steam – and this is what we want to do.

Aside from the privatisation, we generated further significant successes in 2017: Our new business came to a just over € 8.5 billion, illustrating our good position on the hotly contested German banking market. We were able to sign business worth € 2.3 billion with new customers. This illustrates the appeal of our offerings. At the same time, we continued to massively reduce our legacy assets. The path to new horizons has now been cleared.

We’re there for entrepreneurs. And there. And there. And of course there too.

HSH Nordbank is the bank for entrepreneurs. We are where our clients need us. Of course, that is our home region of Northern Germany, but it extends far beyond: in the west, in the east, in the south and in the centre of the Federal Republic we have offices that ensure direct contact with our clients. At selected locations we also operate outside Germany. But no matter where we are: we not only offer tailored financing solutions for traditional SMEs but also command a leading role in commercial real estate financing in Germany. We are in the premier league when it comes to assisting renewable energy projects in Europe, and infrastructure projects also play an important role for us. And it goes without saying that we retain our links to shipping. But our focus is shifting increasingly to the maritime growth markets of Greece and Asia – where our colleagues are, of course, also on the ground.

A new era without legacy assets.

Future assured

The hard and focused work particularly in our operating business has paid off – and has assured the Bank’s prospects.

New clients convinced

In this challenging market, 120 clients opted for HSH Nordbank for the first time. We signed about € 2.3 billion worth of new business with these clients alone – that illustrates the appeal of our offerings.

A new era ushered in

The Bank is at the beginning of a multi-year transformation. We do not shy away from change because this will be part of our everyday life in future.

Legacy assets sharply reduced

We established the conditions for privatisation by having reduced our legacy assets by more than half. In the wake of the change of ownership, we shall dispose of all non-performing loans from the past.

ManagementOur reward for the hard work:the ticket to the future.

Ladies and gentlemen,

In 2017, we established the conditions for the successful privatisation of HSH Nordbank, thereby laying the foundations for a successful future. Over the past few years we have been busy with intensive preparations for the change in owners demanded by the European Commission in the wake of the state aid proceedings. We have now taken a very decisive step forward: On 28 February 2018, the federal states of Hamburg and Schleswig-Holstein and the four US private equity investors Cerberus Capital Management, J.C. Flowers, GoldenTree Asset Management and Centaurus Capital as well as Austria’s BAWAG agreed on the sale of HSH Nordbank. We would also like to express our thanks to the federal states of Hamburg and Schleswig-Holstein as they managed this complicated selling process with commitment, calm and circumspection.

Created with Sketch. continue reading

Sharpening our image, gaining more clients – being successful.

Keeping on going involves a lot.

What was done to make sure HSH Nordbank could find an investor? How does the Bank see the sale? What role did its own staff play? And, above all: Where will you go from here? Interview with Stefan Ermisch, Chief Executive Officer of HSH Nordbank.

We are doing pioneering work with our privatisation. Now it’s a matter of boldly taking advantage of our good prospects.

What is your assessment of the past year?

Stefan Ermisch: 2017 was another year of change, characterised by preparations for the privatisation. We worked hard towards this aim, and our colleagues did excellent work in the process. On 28 February 2018 we were ready: the federal states of Hamburg and Schleswig-Holstein and the four US private equity investors Cerberus Capital Management, J.C. Flowers, GoldenTree Asset Management and Centaurus Capital as well as Austria’s BAWAG agreed on the sale of HSH Nordbank. This means the first successful privatisation of a landesbank in Germany – a historical event. And a huge opportunity for us. We stand at the outset of an exciting journey. However, the two federal state parliaments, the regulatory authorities as well as the European Commission must still give their final approval to the change of ownership. A seamless transition from the guarantee system of the Savings Banks Finance Group to the Federal Association of German Banks has also yet to be managed. As we are breaking new ground here, experts on the guarantee systems are called upon and we are, of course, supporting them to the best of our ability.

HSH Nordbank closed out the year with a loss of 528 million euros after taxes. Why is that?

Stefan Ermisch: The loss is primarily because we sold non-performing exposures (NPEs) from the Non-Core Bank totalling 6.3 billion euros to a vehicle from among the investors. We had to set aside unscheduled loan loss provisions for this. In return, the Bank will be freed from virtually all legacy assets that have been weighing us down massively for years. This liberation is a crucial step for a successful privatisation. The quality of our portfolio thereby improves in one go to a very good level by European standards – our NPE ratio falls below two percent.

How did the operating business perform last year?

Stefan Ermisch: Profit before tax in the Core Bank comes to 732 million euros, which is just under ten percent above the previous year’s figure. We are also benefiting from the leveraging of hidden reserves, which helps us to bear the burden of the past. In new business, we almost reached the good pre-year level with a figure of 8.5 billion euros, and 2.3 billion euros alone were extended to around 120 new clients, something I find particularly gratifying. On top of this, at over 15 percent, our CET 1 capital ratio is very solid – also when compared with the competition. All told, we have achieved remarkable structural successes. The result is generally satisfactory.

"A huge transformation process extending over several years lies ahead of us"

To what extent has the privatisation affected new business?

Stefan Ermisch: There were more than a few who doubted that the Bank could be sold and who made their views known. This led to disquiet and did not make doing business any easier. Given these underlying conditions, our team put up a good show; new business really is respectable.

Is the Bank prepared for the switch to the private bank side?

Stefan Ermisch: One step at a time. In recent years, we have done every­thing to ensure that the privatisation is successful thanks to our good performance and an improvement in our structures. But this alone is certainly not enough, we cannot afford to relax and lean back. A huge transformation process extending over several years lies ahead of us. We are developing from a landesbank with state owners to a bank with private shareholders. The difference could hardly be more pronounced. For us, change will form part of our everyday life more than ever before.

What does this mean specifically?

Stefan Ermisch: In future, we will have to be much more efficient in our work, as illustrated in the following four goals. First, a modest return on equity of at least eight percent. Second, an adequate cost/income ratio of 40 percent when compared with other commercial banks. Third, a sustainable CET1 ratio of 15 percent as our yardstick of security. Fourth, an NPE ratio of less than two percent, which represents the quality of our portfolio.

Are these the challenging goals of the new owners?

Stefan Ermisch: They are by no means overstated. We must set them as a challenge for ourselves because we want to be competitive. Incidentally, the European Commission also has very clear ideas about the future profitability of our Bank, just as it does about the profitability of other financial institutions. It grants its approval to privatisation only if proof of a bank’s viability has been provided – the above performance indicators play a key role here. The Commission wants a strong, commercially successful bank with a stable market presence. Which is exactly what the management team wants.

How will the Bank’s business model change?

Stefan Ermisch: We will continue to be a commercial bank with loans as an anchor product but with a new name. Our current business areas constitute the structure of the new bank. At the same time, we will widen our horizons while maintaining a sense of proportion. We will be able to do this because after the transaction is closed, which is expected to take place in the second or third quarter, the restrictions from the EU state aid proceedings will no longer apply.

What might an expansion of activities look like?

Stefan Ermisch: Looking forward, we will be able to extend our real estate business cautiously to a number of international markets. We will strengthen our presence in Singapore, Asia’s growth centre, and new opportunities are opening up in the capital markets business. We already have operations outside Germany when it comes to financing infrastructure projects and renewable energies, and here we intend to expand our radius slightly. Despite the predatory competition, we will carefully intensify our clearly sector-focused presence in the German SME segment, selling more services and thereby improving our non-interest-related income.

Will structural and personnel changes be necessary?

Stefan Ermisch: We are faced with the task of transforming a former public-sector bank whose total assets once came to around 200 billion euros into a private bank with target total assets of less than 60 billion euros. Years ago, we agreed a necessary capacity reduction to fewer than 1,600 full-time equivalent positions by mid-2019 with our social partners. With the success of the privatisation, all issues relating to the Non-Core Bank will no longer apply, as the latter will cease to exist. We will face the new tasks presented by the future.

What does this mean?

Stefan Ermisch: We are seeking to become an agile and excellent commercial bank of medium-sized nature. We will discuss the necessary personnel adjustments with our social partners at the appropriate time. Generally speaking, it is about further streamlining the back-office structures that are still too complex and that partly date from the old days, and about strengthening sales in a meaningful way. We will increase our speed, become more agile and work more independently of rigid hierarchies. What this also means is a change in our management structure. We need more creativity; more diversity. Our aim is to create a new bank that is successful with its private shareholders. I see great potential in the new bank.

Stefan Ermisch, Chief Executive Officer

Our path to privatisation: Becoming leaner, more effective and stronger

6,2 Bn Euro

existing clients

2,3 Bn Euro

new clients

Energy & Utilities

Top 5 European Financiers

1.1 Bn New Business Euro

Real Estate Clients

Loan Portfolio:

11.8 Bn Euro* *EaD

Clear principles, high pace, tough cutbacks: We more than halved the amount the amount of our non-performing loans within the space of twelve months.

Non-performing loans – many of them from shipping – have been a burden on the Bank for many years. How did the wind-down progress in 2017?

Ulrik Lackschewitz: Very well! Within the space of twelve months we have cut the volume of non-performing exposures (NPEs) within the Bank in half: from 14.6 billion euros at the end of 2016 to 7.5 billion euros at end 2017. We have thus been able to scale down our legacy assets very quickly. This reduction has made a crucial contribution to our successful privatisation. The volume of the entire Non-Core bank – which in addition to non-performing exposures has always included non-strategic portfolios – has been reduced by more than half within the space of a year: from 21.4 billion euros to 9.8 billion euros.

Why was the wind-down so fast?

Ulrik Lackschewitz: There are several reasons for this. The rather positive shipping market – many non-performing exposures are in shipping – together with a slightly weaker US dollar but also our own restructuring successes, thanks to which exposures are restored to health and no longer form part of the NPE portfolio. All these factors have a role to play. But almost as importantly: we have changed our approach.

What do you mean?

Ulrik Lackschewitz: We set ourselves even clearer principles during restructuring and recovery and were willing – to an even greater extent than previously – to accept tough cutbacks. At the same time, we were always guided by what is best for the Bank and the guarantors.

Can you be more specific?

Ulrik Lackschewitz: If we recover or restructure a non-performing exposure, it must be restored to health for good because we simply do not want to shift the problem to sometime in the future. In 2017, there was a slight uptrend involving container ships and general cargo carriers. Because we do not know how long this trend will last, we took advantage of the window of opportunity to reduce our NPE portfolio as extensively as possible – we definitely did not want to miss the chance to exit our portfolio. But it is very important for me to stress: the rapid wind-down was only made possible by the fact that our entire organisation worked together extremely well. This was an outstanding team effort.

Freed from non-performing loans, our prospects are good.

"Very fast reduction of contaminated sites succeeded"

What impact does the privatisation have on legacy assets?

Ulrik Lackschewitz: In the wake of the change in ownership, we disposed of almost all non-performing exposures from the Non-Core Bank, mostly ship finance, with a volume of 6.3 billion euros to a special-purpose entity set up by the investors. This portfolio transaction is, however, subject to the condition precedent of the privatisation being successfully completed, which will happen once the transaction closes. This is expected to be the case in the second or third quarter. To enable the sale of the 6.3 billion euro portfolio and thus enable the important release from the legacy assets, we had to make additional, non-recurring write- downs totalling 1.1 billion euros. We had already set aside very extensive loan loss provisions of 2.8 billion euros for the portfolio.

So why is the additional write-down so large?

Ulrik Lackschewitz: It corresponds to the difference between the net carrying amount and the purchase price. The portfolio includes highly problematic assets. It is not a coincidence that we have been unable to wind them down – they are simply of poor quality.

But doesn't the purchase price correspond to the value used by the bank to measure portfolios?

Ulrik Lackschewitz: Unfortunately, it is not quite as simple as that. In some cases it is very difficult to establish the value of such a large portfolio on the tight shipping market. We must not forget one thing: although the shipping markets have recovered from their historical lows, they remain at a very low level.

The federal states’ guarantee has been fully utilised in balance-sheet terms. What does this write-down mean for the Group net result?

Ulrik Lackschewitz: We are showing this loan loss provision in our income statement, which was the main reason for our loss of -528 million euros after taxes in 2017. This was a tough but necessary caesura. The portfolio sale means that the Bank has divested almost all its legacy assets. The NPE ratio of the Bank as a whole – which is the only one we will be referring to in the future – will thereafter fall to less than two percent. This is a good figure compared with the competition. Freed from our legacy assets, our prospects are good.

Ulrik Lackschewitz, Chief Risk Officer

Real Estate ClientsOur projects consist ofcement, glass,wood, vision,market knowledgeand good figures.

HSH Nordbank is among the major finance providers in Germany. Our business partners appreciate our expertise and decades of experience in the real estate sector. We have a sympathetic ear for our clients; we understand their business plans and jointly work out dedicated solutions – from conventional mortgage loans through to complex, structured finance. Thanks to clean processes and short decision-making channels, investors, property developers and building contractors receive transaction security for their plans quickly and reliably – exactly what they need.

When it comes to new business, it is important to us to keep a keen eye on the risks. “In a maturing market, we will take another, closer look: We examined projects amounting to about € 22 billion and ultimately closed € 4.7 billion worth of that business,” says Peter Axmann, Head of Real Estate Clients. We simultaneously make sure of a balanced mix in our loan portfolio, which is why it includes residential real estate, offices and retail properties in equal measure. We are also broadly positioned in regional terms: in addition to our head offices in Hamburg and Kiel, we have branch offices and regional expertise in Berlin, Düsseldorf, Frankfurt, Stuttgart and Munich. Our established clientele furthermore includes well-known international investors, whom we assist in their projects on the sought-after German real estate market.

Peter Axmann, Head of Real Estate Clients

Fig.: TAS Group of Companies An der Alster 1, Hamburg

Real Estate Clients

Strong for entrepreneurs

Real Estate Clients

Strong for entrepreneurs

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.

TAS Group of Companies: the Hamburg movers and shakers.

Hamburg is changing. The TAS Group of Companies with Marcus and Thomas A. Schwarz is playing a successful part. Down to earth, dependable and expert, as Peter Axmann, Head of the Real Estate Clients division, says. You will discover in this video what he and Thomas A. Schwarz also have to say.

Brick upon brick upon brick upon brick upon brick for good collaboration.

TAS group of companies

When the topping-out ceremony for the building shell took place at Übersee­ring 2 in Hamburg’s City Nord in spring 2016, Hamburg’s former Mayor Olaf Scholz welcomed the guests in person. This is because, with Deutsche Telekom as a tenant, one of the world’s major telecommunications companies has committed itself to Hamburg. A decision that is good not only for Hamburg as a location to do business. Olaf Scholz also praised the pioneering architecture and the stimulus the project has created in urban planning terms.

The TAS group of companies was responsible for developing the flagship project. In just 15 months of construction time, it erected a nine-floor office tower on schedule, giving 2,150 employees of the magenta-coloured company a place to work. The new building was financed by HSH Nordbank. “We supported this project from start to finish,” said Relationship Manager Thomas Wente, who has been looking after the real estate firm for years. “Once again, we have seen the degree of professionalism with which TAS handles project realisation, including and especially if there is a hitch.” For the TAS group of companies, the Telekom head office is the fourth project in City Nord, following on from the revitalisation of the Allianz head office, the building of a new 18-floor Holiday Inn hotel and the revamping of a multi-storey car park, and it marks a further important milestone in the development of the office district in Hamburg‘s north.

Behind the company and its three letters stand Thomas Schwarz and his son Marcus, who established TAS in 2003 as a Kommanditgesellschaft (limited partnership). From its offices in Hamburg and Cologne, the family-run business has been successfully working as an investor and project developer for company head offices, hotels and residential districts throughout Germany.

Father and son consider that they have a responsibility on multiple levels: towards society, business partners and members of staff, many of whom have been with them for years. Coopera­tion based on trust is also important for Managing Director Marcus Schwarz when it comes to selecting the financing banks: “We can rely on HSH Nordbank one hundred percent. Not only do our contacts have excellent expertise, they also are a good fit for our company and our values in human terms.” Many thanks for these words of praise! We are very happy to hear them, and that’s how it is supposed to stay.

Thomas Wente Client Relationship Manager, Real Estate / Marcus Schwarz Partner, TAS Group of Companies / Stephan Ölze Managing Partner, TAS Group of Companies

Aesthetics apply to living space apply to Hamburg apply to custom-fit finance.

Günther Franke Gruber Bauherren

Christoph Günther, Andreas Franke and Christoph Gruber – the three business management experts have a clear philosophy: “Every house we build, we are as committed as if we were building it for ourselves,” says Christoph Gruber. Hence the name ‘Günther Franke Gruber Bauherren’, literally ‘masters of construction’, under which the partners have been trading since 2010. 15 years before, in 1995, they successfully developed their first joint real estate project under the name of the family-run company Jacob Jürgensen.

Since then, the three managing directors, friends since school and university, have been planning and realising high-quality living space in and around Hamburg. All told, they have completed 84 buildings so far with more than 1,000 apartments. The buildings were tailored to the requirements of the prospective residents: as modern classics they not only meet the highest design requirements, they also outlive fads and architectural currents. They are characterised by their own timeless style, which is based on creative re-­interpretations of classic architectural elements.

The Hamburgers only get involved if they are 100 % convinced by a plot. Each project is managed by one partner, who puts together a team of architects, engineers and in-house specialists. What drives the three entrepreneurs: their passion for beautiful buildings.

The three individualists have been working together with HSH Nordbank for more than two decades. “What we particularly appreciate is that the exchange with HSH Nordbank is a partnership of equals,” says Andreas Franke. “The collaboration is uncomplicated, decisions are transparent and agreements are implemented reliably and promptly”. Christoph Günther adds: “We are Hamburgers and our planning area is the metropolitan area around the Alster and Elbe rivers – hence a competent finance provider with tradition who knows the region and industry in detail is a wonderful fit for us.”

The most recent joint project initiated by Christoph Günther, “Oslever Hööv” in the west of the Hanseatic city was completed at the end of 2017 and gives around 300 Hamburg citizens a new home in 130 apartments. HSH Nordbank client relationship manager Susanne Siemer accompanied the financing: “It is great to see how Messrs. Günther, Franke and Gruber burn for their projects. The three men have an excellent construction and business management understanding,” she adds, “and what is more, they attach great importance to aesthetics in their buildings.”

HTG Hoch- und Tiefbau Gadebusch GmbH, the potent and expert partner in this project with a 50% stake, boasts 50 years of experience in the construction business. We have known the managing director, Franz Gelz, for years as an accomplished businessman and civil engineer, whose know-how stands for good build quality.

Christoph Günther Managing Director Günther Franke Gruber Bauherren / Susanne Siemer Client Relationship Manager, Real Estate / Franka Cratzius, Chief representative of HTG Hoch und Tiefbau Gadebusch GmbH

Corporate ClientsBanking for SMEs is like a decathlon.

Those who master every discipline are at the front.

Setting up solar parks, growing a food producer, a strategic investment in a chemicals wholesaler, establishing Next Commerce Accelerator – just a brief glance at but a few of our activities makes it clear that we cover a very broad field in our Corporate Clients segment. Diversity and flexibility are the characteristics for which we are known among our clients, and they are the charac­teristics that count if you provide SMEs with loans and banking services.

In our focal industries we score with industry, product and advisory expertise, be it in Energy & Utilities, Infrastructure & Logistics, Industry & Services, Healthcare, Food & Retail, Wealth Management, Structured Finance or Merger & Acquisitions. We are an integrated corporate finance bank that offers an all-in service thanks to our positioning in the areas of structured finance and leveraged buy-outs. Our clients of long standing appreciate this – as do the many who join us every year.

Our target clients are owner-managed companies. In geographical terms, we are not limited to our home region in Northern Germany: we also successfully complete transactions in the south, west and east of Germany. And we assist German companies with their business activities outside Germany, where we have developed such new markets as Portugal and the Netherlands – a key to further growth.

Patrick Miljes,
Head of Corporate Clients

All told, we have so far financed more than

about 5,5 Gigawatts from renewable energies.

One of the first enterprises to build wind farms.

One of the first banks to finance them. Fits.

ABO Wind

When Dr. Jochen Ahn and Matthias Bockholt started their own business ABO Wind in 1996, Oliver Bierhoff scored the golden goal that made Germany the winner of the European Cup. The exit from nuclear power as dream of the future and wind power a side topic mockingly sneered at by many – those times are gone. HSH Nordbank – or, to be precise, its predecessor institutions – were at the time among the first banks to finance projects in the renewable energies segment. Today ABO Wind AG is one of Europe’s most successful wind farm developers; all told, the company has connected more than 600 wind turbines with a performance capacity of around 1,400 megawatts to the grid. A partner by its side along the way: HSH Nordbank. We are now among Europe’s top five finance providers for wind and solar projects. Pioneering spirit paying off. The founders of ABO Wind are still members of the company’s management board, which plans, finances and builds not only turnkey wind farms but also offers the operational management of wind farms, maintenance, audits, repairs and technical opinions. ABO Wind is now also planning and building photovoltaic projects. All told, around 500 specialists are working to implement the energy turnaround at the head office in Wiesbaden – in Germany and far beyond. “For the financing of two wind farms in Finland in 2017 we required a banking partner with in-depth knowledge of the Finnish market”, says Petra Leue-Bahns, Head of Finance and Sales at ABO Wind. “Once again, HSH Nordbank offered us very good and above all viable solutions within a short space of time.” A service of this quality is also possible because we have built up great knowledge and many contacts in the renewable energies sector over a period of decades. “We have a good basis of mutual trust with ABO Wind since years”, says Torsten Heidemann, client relationship manager at HSH Nordbank. “It is this which makes our collaboration so constructive and gratifying – both now and in the future.”

Two pioneers in Finland: ABO Wind and HSH Nordbank.

ABO Wind was one of the first companies to build wind farms. HSH Nordbank was one of the first banks to finance them. How the shared, pioneering stance made the relationship between bank and client special – that’s what this video is about.

Strong for entrepreneurs

Energy & Utilities

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 nancial 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.

Vapiano in figures: 5550 employees, 205 branches, 33 countries.

Vapiano in words: a good partner.

Vapiano

A handsome olive tree, long oak tables, a bar and lounge area as well as the preparation island made of glass at the heart of the restaurant offering fresh pasta, pizza, salads and desserts – every Vapiano restaurant offers its guests the same relaxed, casual atmosphere. And this everywhere in the world. The success story of Vapiano began in 2002 with a restaurant in Hamburg. Since then, Vapiano has been setting standards in system catering with its fresh, casual dining concept. The company has grown strongly in recent years and has am­bitious growth plans following its successful flotation in 2017. Last year alone Vapiano opened 27 new restaurants worldwide and has thus expanded its international footprint to 205 restaurants in 33 countries on five continents. Around 5,500 staff members work for Vapiano.

HSH Nordbank has been one of the company’s financing partners for many years. “With all the changes our company has made in recent years, HSH Nordbank is a reliable partner that understands and advises us well,” said Lutz Scharpe, CFO of Vapiano.

“Vapiano has an innovative business model of an exemplary nature for the food service industry,” Jan Ströhnisch, Client Relationship Manager at HSH Nordbank, said. The motto is: never stand still, constant improvements in the organisation of processes – as in the preparation of meals or the training of personnel. For example, Vapiano is breaking new ground by taking orders via terminals or their smartphone app to shorten the waiting times in its restaurants. Furthermore, the company is successfully offering more and more restaurant takeaway and delivery services to enable guests to enjoy Vapiano “anytime, anyplace, anywhere”.

Further plans? By 2020, the company aims to have around 330 restaurants worldwide carrying the Vapiano logo. “Go slowly” is a rough translation of the Italian term “va piano”. Something that definitely does not apply to the company.

Strong for entrepreneurs

Food Industry

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.

Lutz Scharpe CFO, Vapiano SE / Jan Ströhnisch, Client Relationship Manager, Retail & Food

ShippingLessons learned,many things improved,opportunities kept.

Shipping RELOADED

Yes, HSH Nordbank traditionally had very close links to the domestic shipping industry. There were times when the Bank was famed as – looking back, the claim to this fame was doubtful – the world’s biggest provider of ship finance, including unfortunately the corresponding cluster risks and write-downs totalling billions of euros. It is a well-known fact that this legacy proved a huge burden on the Bank during the shipping crisis, which has been ongoing since 2008. We have meanwhile succeeded in winding most of this down.

We have learnt from past mistakes and drawn the conclusions. What this means is that although we remain active in shipping, our activity is on a completely different basis to before – with a sharpened risk awareness and a focus on successful companies with a viable business model. And, above all, on a much smaller scale. At the end of 2017, our lending volume in shipping came to nearly € 5.5 billion, having concluded new business worth over € 500 million. Instead of focusing mainly on German clients and their container ships as we had done in the past, we now work more with international clients who manage their companies successfully and are active in a variety of segments. Of course, we did ask ourselves whether we should remain active in shipping at all. The answer is yes. This is because, looking ahead, we are convinced that maritime shipping will still be promising. Not only because the industry is currently experiencing a high level of consolidation, as a result of which new, strengthened entities are being created. Freight rates and ship values have also stabilised in the wake of one of the most serious crises. The market thus now offers good opportunities to invest with a sharpened risk perspective. But what is decisive is that global trade keeps growing; at an average rate of 4.7 percent per annum over the past two decades. And how are more than 90 percent of goods transported for example from Europe to Asia; from Asia to the US and from South America to Asia? By sea, exactly. And no, there are no alternatives in sight.

Strong for entrepreneurs

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.

From neighbour to neighbour.From bank to shipping company.From Hapag-Lloyd to HSH Nordbank.

Hapag-Lloyd

Good neighbours are precious. This applies to our private lives as much as it does to the world of business. It is not surprising, therefore, to hear that HSH Nordbank and Hapag-Lloyd are joined by a long partnership. The head offices of the two companies are only a stone’s throw away from each other. And, unusually, this linguistic image can be taken (almost) literally.

However, the good collaboration is not limited to the Bank providing the company with finance. A large shipping company possessing international operations such as Hapag-Lloyd of course also uses other forms of financing, such as bonds. They are placed on the capital market, where such institutional investors as insurance companies, pension funds and high net worth private individuals make direct investments. Last year, we were able to assist our shipping line neighbours in the placement of two bonds with a total volume of € 900 million as joint bookrunners of an international banking syndicate. “It always pleases us to be able to assist a long-standing client such as Hapag-Lloyd in an important placement,” said Andreas Rasch, a member of the Bank’s shipping team. “Interest in the bonds was very strong.”

Satisfaction was also felt by Germany’s largest shipping company, which moved up into fifth position worldwide in 2017 following its merger with Arab shipping company UASC. “The placement was highly successful and contributed to optimisation of the maturity profile and financing costs,” said Michael Kastl, CFO of Hapag-Lloyd. “In such a transaction, the fact that we have been in close touch with the Bank for many years and know each other well pays off.” And the cooperation will, of course, continue – in a spirit of trust, from door to door in downtown Hamburg.

Treasury & MarketsDoing business more securely and more intelligently– that is the future.

We have made a start.

Treasury & Markets

Computer systems that hedge currency risks and manage liquidity with the help of algorithms; artificial intelligence that performs market analyses for lending to public-sector clients – the topics of tomorrow that Treasury & Markets is already actively tackling. Including such questions as, what will clients want from a bank in future? Where are the opportunities presented by Robo Treasury – and what about the risks?

To allow colleagues in other departments to benefit from these ideas and findings, we summarise all of it in an innovation blog. Because Treasury & Markets is not a closed shop, it is keen to share ideas with internal and external specialists. Always on the look-out for ideas to improve the service we provide to our clients – and to enhance our own performance. We want to be prepared for the challenges of tomorrow. The markets are changing; we are driving the transformation.

In addition to these forward-looking projects, the segment does, of course, look after its core functions: placing bonds and state treasury notes, issuing investment products, responsibility for the Bank’s liquidity management and refinancing and the individual hedging of interest-rate and currency risks for clients.

Treasury & Markets is of key importance to the Bank’s success. It is all the better, therefore, that the segment, after realigning itself in 2016, continues to gain pace and can look back on a successful year 2017. The steady rise in income is a good indicator of this.

But it is not the only one: At the same time, we have expanded the number of domestic and international institutional investors, widened our underwriting and syndication and brought a debt fund to market readiness. We have also broken new ground in the refinancing of the Bank and opened up access to private clients. This is an important step, which we accomplished in collaboration with Hamburg’s fintech Deposit Solutions. What exactly does this mean and how does it work? Find out on the next page.

Highlights from our range of services:

  • We are closely connected with more than 800 clients, including many institutional and public-sector investors
  • We assist well-known issuers of bonds and promissory notes
  • We structure refinancing products for corporate clients
  • We continue to enhance our deposit-taking, interest-rate and currency management – areas in which we have long-standing expertise
  • We manage and hedge market price risks for our clients
  • We are dependable partners to real estate companies when it comes to managing risk and we offer customised solutions
  • We have established the Treasury & Markets LDR as an innovation workshop for the capital market business
  • We have successfully taken retail deposits for the first time and have thereby broadened and diversified the Bank’s refinancing base

Mark Bussmann, Head of Treasury & Markets

Proactive on liabilities. Broader-based funding making us more independent and flexible.

Proactive on liabilities and equity!

As a wholesale bank, we are strong providers of finance to our corporate clients. The liabilities and equity side of our balance sheet decides how flexibly, attractively and extensively we can do so. That is where we refinance; where funding takes place. It is a pertinent matter for all banks because it determines the parameters for the entire client business. And it is where we took a giant leap forward in 2017, opening new, additional avenues for us. It is because we broadened our funding and found a new refinancing channel that enables us to spread our risk very efficiently; to be less exposed to major, single counter­parties and, in so doing, to flexibly manage our need for liquidity. Even though we are wholesalers, private clients can thereby also benefit from our attractive terms and we are pleased to accept such deposits. “Access to retail clients is extremely important,” said Mark Bussmann, Head of Treasury & Markets at HSH Nordbank. “This is because particularly the time deposits of private clients have a positive impact on funding structure, liquidity ratios and balance-sheet structures.”

We have found a strategic partner for this business: money can be deposited with HSH Nordbank online via the Zinspilot.de platform of Deposit Solutions. The success story of Deposit Solutions begins with courage, creativity and the simple as well as brilliant idea of offering savers better interest rates and banks better refinancing opportunities – uncomplicated, inexpensive and fast. The idea was so good that Dr. Tim Sievers won an EU innovation award in 2010 and established Deposit Solutions. The company meanwhile employs more than 200 people Europe-wide and had brokered savings deposits of about four billion euros to the end of 2017.

HSH Nordbank has been working with Deposit Solutions since autumn 2017. “I am pleased that the cooperation happened and has been working so well right from the off,” said Dr. Tim Sievers, the company’s CEO and founder of the company. We are happy too: in the first four months alone, we raised € 600 million via the platform – despite a maxi­mum investment sum of € 100,000.

Dr. Tim Sievers, CEO & founder of Deposit Solutions

Mark Bussmann, Head of Treasury & Markets

IT & InnovationA new banking world.1000 digital opportunities.We’re taking them.

Profound digital transformation

The world of IT is changing very rapidly. How is HSH Nordbank responding to this?

Ulrich Scheer: Aligning our IT to the new challenges is something we do all the time. This is evidenced by our digital strategy, for example, which extends far beyond IT. It deals with how we can use the opportunities provided by the digital world for our business model. One example is our successful banking app. At the same time, we have set up a central data platform, which provides the basis for the Bank’s further digitalisation. Although we have already achieved much, we cannot allow ourselves to rest – quite the opposite. Work is now starting in earnest because we want to keep abreast of future issues.

What does this mean specifically?

Ulrich Scheer: We as a society are experiencing a profound digital transformation, and we are preparing for it. Improve the user experience, raise efficiency, make cooperation faster – there are plenty of issues where we want to get better. In everyday life a mobile IT world predominates, in which apps play an increasingly important role: to book a cab, for pizza delivery, for the weather, there is an app for almost everything – this is what is called the disintegrated IT world. Many banks, including ourselves, have a rather monolithic IT architecture with large blocks that are not very flexible. To pick up speed and implement projects more quickly, we will need handy systems for individual functions allowing us to respond quickly. In short, our IT landscape needs to become more agile and more flexible. This is what we are working on."

Does this entail major investment?

Ulrich Scheer: The good thing about the new IT world is that small measures are sufficient to achieve good effects. We are making a start with projects requiring minor financial input, which will – we hope – nevertheless provide us with new opportunities.

Many businesses have recently suffered losses due to cybercrime. Are you experiencing higher threat levels?

Ulrich Scheer: Yes, we are in the same boat as other businesses. We are preparing for the new situation by strengthening our security architecture substantially and expanding it continuously. IT security is now a key element of our work. IT and thus its security is now of great importance from a regulatory perspective. It is deemed just as important by the regulators as the key factors of a bank, i.e. capital and liquidity.

How do you keep up to date with innovations?

Ulrich Scheer: We do not have the means to push ahead with market- moving new developments ourselves, we are too small for that. But we feel very comfortable in our role of early follower. We are focusing systematically on such specifics as blockchain. For us, the focus is on innovation.

Ulrich Scheer,
Head of IT

EconomicsAnyone seeking raw materials must dig deep.Anyone wanting to understand the market must do so, too.

The oil price is up, copper is climbing to a four-year high, palladium reaches previously unseen price levels – the metal is used as a component in catalytic converters in vehicles and is therefore particularly sought-after. On the international commodities markets there is always a lot of movement; most recently, prices have risen sharply, in some cases with huge consequences for companies who suddenly have to calculate with substantially higher costs. Anyone able to guess in early 2017 that the price of a barrel of crude oil would rise by more than 20 percent within the space of twelve months would probably have got themselves some hedging. But hardly anyone did. “With our analyses and forecasts about the commodities markets we are attempting to give practical help to our clients,” says Jan Edelmann, commodities analyst at HSH Nordbank. He deals with the markets on a daily basis and gets to look behind the scenes. Jan Edelmann knows the strategies of US shale oil producers, he observes how the Chinese government manages its economy and keeps an eye on the consequences which the establishment of new technologies has. “Copper, aluminium, nickel and zinc are used in the building of electric vehicles,” he says. “Demand and thus prices remain high.” But if prices are high, cannot a new producer simply come along? “It’s not quite as simple as that,” says the economist, whose knowledge is regularly sought out by a variety of newspapers. “Ten years go by until a new copper mine is established, such a project costs a few billion euros.” Good to know. So, will commodity prices remain high? “If the global economy remains robust, it is likely they will,” Edelmann thinks. His advice: “Always keep an eye on all factors.” Good idea, but that’s really his job.

The world is becoming more complex, connectivity is on the rise. Has it become more difficult to make economic forecasts?

Dr. Cyrus de la Rubia: Predicting the performance of the economy has never been easy. Nothing has changed in this respect. But it has become increasingly difficult to understand the present because we note that some patterns and principles which once used to apply no longer do so.

Can you give me an example?

Dr. Cyrus de la Rubia: If the economy does well and unemployment falls, the rate of inflation normally rises – that’s what the textbooks say. For the past few years it is not only the German economy which has been buzzing, we are even getting close to full employment – and yet inflation remains low. It would seem that some of the old teachings no longer apply.

Why does the correlation between full employment and inflation no longer apply?

Sintje Boie: One important point is technological progress, for example as a result of digitalisation. It leads to lower production costs, in some cases products are being offered at lower prices thanks to new commercial structures such as e-commerce. This pushes down inflation. But we are also preoccupied by the fact that interest rates have remained low for so long. Here, the ageing population probably plays a major role.

What does the ageing population have to do with interest rates?

Dr. Cyrus de la Rubia: At present, the baby-boomer generation is gradually approaching retirement age, a phase in life when savings build up. The savings/investment ratio has a big effect on interest rates. If savings rise while investments stay steady, there is an excess supply of cash – interest rates remain low. This trend could be reversed once the baby-boomers actually enter retirement age. Then savings will be used up, which should lead to higher interest rates.

How can the Bank‘s clients benefit from the findings of your macroeconomic analysis?

Sintje Boie: We are engaged in a constant exchange with our clients and pay them regular visits together with our sales colleagues. Many clients are well-informed, but they look for someone with whom they can discuss their views; events such as our “Zinsfrühstück” (interest-rate breakfast), for example, provide a forum for them. In addition, we pick up on current issues in our traditional publications, we express our views in comments and provide information in modern formats such as webinars.

An important topic at the moment is that of exchange rates. Will the euro strengthen further against the dollar in 2018?

Dr. Cyrus de la Rubia: We remain positive on the euro. We also stick with our position because it is being strengthened by political initiatives in Europe.

Jan Edelmann, Analyst / Dr. Cyrus de la Rubia, Chief Economist / Sintje Boie, Analyst

How is who and what where by connected when and why? Our studies pro vide answers that help our clients move forward.

Close to the markets, close to trends, close to its clients – the analysts of HSH Nordbank translate models and theoretical knowledge into practical benefits for companies. “We want to highlight what is important and provide relevant information,” says Tom Miller. Like his colleagues, he regularly visits clients to share his knowledge.

If you want to shape the future you have to understand the present and recognise emerging developments. This is exactly what our studies help achieve: healthcare sector, nutrition, infrastructure, renewable energies, rail, wind, fashion – the list of studies on current topics is a long one. The studies are based not only on thorough research, that is, a fine-grain analysis of the sector, but also on many interviews with specialists. One example: the discussions held by Tom Miller and client relationship manager Thomas Glahe with Christian Strauch, CEO of apo-rot, one of Germany’s leading online mail- order pharmacies, which found their way into the “Healthcare Industry 2017” study.

The Hamburg-based company has built up a mail-order pharmacy around its branches – and it is extremely successful. “We are breaking new ground,” says Christian Strauch. “Here it is important to maintain a close exchange of ideas with other specialists. Discussions such as those with HSH Nordbank help us advance in our thinking.”

Tom Miller’s study on the healthcare industry caused a stir in the sector. “It is important for us to work through data and facts in such a way that clients are able to use them specifically for strategic decisions,” says Miller. “We are guided by two questions: What concerns our clients? What helps them move forward?”

Research equals science in the ivory tower? No, we have a very different outlook. Our motto is, make as much knowledge as possible as usable as possible – for the benefit of clients.

ProspectsThanks for working with us.And thinking ahead with us.And pitching in with us.And sharing the passion with us.And campaigning with us.

Staff

As the saying goes, our youth is our future. This of course is true, and we have been taking it to heart for many years. Our young colleagues, male and female, are so close to our hearts that we have been offering them not only various dual training positions and extensive trainee programmes, we also prefer to fill open positions from the ranks of our own young professionals. For these youth initiatives we were once again recognised as a provider of high-quality, career-promoting and fair training programmes and as “fair company” for interns and university graduates by Absolventa GmbH, a jobs fair specialising in career starters. We were very happy to receive this accolade – and it spurs us on in our commitment to go even further on our way.

To avoid any misunderstanding, let us clarify: We know, of course, that it’s not only about the young – it‘s about the right mix. Experience is important, as is in-depth sector knowledge and, obviously, a broad network. Simply all that which many of our male and female colleagues contribute. They are well-qualified, highly motivated and they form the core of our modern, successful human resources work. This, in turn, finds expression in our staff‘s performance ability. And as far as that is concerned it looks good to us. Otherwise we would have not been able to make the privatisation, new business and the run-off of legacy assets a success. This can only be done with good people. And we have them.

In order to continue advancing our male and female colleagues we offer them extensive opportunities for further development in personal and skills terms. But work is not everything, the work/life balance also needs to be right. That is why we offer not only flexible working hour models but also comprehensive advisory and information offerings on the subjects of family, relatives and the compatibility of family and work. These have a good take-up – and this includes our young colleagues, male and female.

Judith Steinhoff, Head of Human Resources

Internal Auditing

Internal Auditing provides objective, risk-focused auditing and consulting services which extend across all of HSH Nordbank‘s business activities and processes. It evaluates the effectiveness, efficiency and correctness of risk management, the internal control system and of management and monitoring pro­cesses. Internal Auditing is involved in all material projects and in all changes to operational processes and structures. It has an unlimited right of information in order to fulfil its mandate. It acts independently and on its own initiative at all times.

The Compliance division works centrally and across divisions to ensure compliance with the main legal provisions and parameters within HSH Nordbank. It therefore monitors the Bank’s capital market activities and applies structural measures to prevent money laundering, the financing of terrorism and other criminal acts. It furthermore oversees ongoing compliance with all relevant financial sanctions and embargoes. The basic rules of behaviour for the Bank’s employees are summarised in a Code of Conduct. In conjunction with regular training events, employees are provided with a reliable guide regarding legal requirements as well as ethical and social principles. In addition, HSH Nordbank has established an external office for whistleblowers. It follows up internal and external tip-offs, including those received anonymously, and passes suspected cases on to the Compliance division.

Compliance

The Compliance division works centrally and across divisions to ensure compliance with the main legal provisions and parameters within HSH Nordbank. It therefore monitors the Bank’s capital market activities and applies structural measures to prevent money laundering, the financing of terrorism and other criminal acts. It furthermore oversees ongoing compliance with all relevant financial sanctions and embargoes. The basic rules of behaviour for the Bank’s employees are summarised in a Code of Conduct. In conjunction with regular training events, employees are provided with a reliable guide regarding legal requirements as well as ethical and social principles. In addition, HSH Nordbank has established an external office for whistleblowers. It follows up internal and external tip-offs, including those received anonymously, and passes suspected cases on to the Compliance division.

We commit ourselves even in difficult times. And not only because it sounds good.

A company’s success is traditionally measured in numbers, data and facts. It is about sales, profit and growth rates – but this alone is not enough. Companies need and want to be more than an integral part of economic life. They assume social responsibilities, they are also involved in social, cultural and ecological issues. It is important for them to give something back to society, which made their success possible in the first place.

For us, social responsibility is a practice we have lived for many years and from which we did not depart even in economically difficult years. Reliability matters to us – also because we know that a long-term view is necessary to establish projects such as “Kids into the Clubs”. With this initiative children and young people from socially disadvantaged backgrounds are given an opportunity to do sports in a club. There they learn much more than how to stop a ball correctly or how to run with endurance: In a club the children experience success, they get to know the strengths of a group and they are able to test themselves in many different ways. In short: they discover new ways of looking at their lives and see opportunities. We are happy to be able to support them in this process.

HSH Nordbank is a founding member of the Elbphilharmonie Foundation and supports the Elbphilharmonie’s programme as a classic sponsor. As a sponsor of “Resonances Season 2017/18” we contribute to ensuring that the Resonance Ensemble is able to stage classical music live in the Elbphilharmonie.

Together with the Savings Banks Finance Group we are among the main sponsors of the Schleswig-Holstein Music Festival (SHMF), which we have been supporting since its inception. Our commitment also includes the annual 10,000 euro Leonard Bernstein Award for young artists.

As a premium partner of Kieler Woche we collected around 30,000 euros for our charity “Good for kids” last year, which also enables children and young people to take part in club sports.

During the winter months we supply the homeless day centres Herz As in Hamburg and Hempels e.V. in Kiel with hot lunches. So far, we have prepared around 28,000 fresh meals for the homeless.

Last but not least, we sponsor the HSH Nordbank Run, the biggest charity run in northern Germany. In 2017 alone, it had more than 24,000 participants in 831 teams, collecting a donation total of 155,000 euros for the “Kinder helfen Kindern” (Children helping Children) charitable association."

Ensemble Resonanz, RIAS chamber choir Conductor: Justin Doyle

Elbphilharmonie, Grand Hall, sample

Back