BERLIN, Feb. 16 (Xinhua) -- U.S. private equity firms Cerberus and J.C. Flowers are poised to acquire the ailing German financial institution HSH Nordbank, local media reported on Friday.
Business publication "Manager magazine" cited an informal agreement between the investors and the state governments of Hamburg and Schleswig Holstein that hold the majority of HSH Nordbank's shares.
Considered to be the world's largest provider of maritime finance, the Hamburg-based bank was heavily-hit in the 2007/08 financial crisis, leading the emergency provision of government credit guarantees worth 10 billion euros (12.4 billion U.S. dollars) and the launch of a far-reaching corporate restructuring program.
According to the report, the bank's chief executive officer (CEO) Stefan Ermisch was a key figure in setting up HSH Nordbank's sale to Cerberus and J.C. Flowers and intends to keep his post under new ownership.
Ermisch has already made extensive plans for his firm's future as a private-sector institution, having unveiled goals for the year 2022 to shrink the balance sheet from currently 74 billion euros to 55 billion euros, whilst increasing pre-tax profits from 300 million euros to 446 euros.
Additionally, the CEO would like to reduce the bank's headcount by 30 percent from 1,900 to 1,300 employees.
HSH Nordbank was originally formed in a fusion of the state banks of Hamburg and Schleswig Holstein in 2003. The private equity firm J.C. Flowers first acquired a share in the financial institution in 2006, prior to the outbreak of the financial crisis.
"Manager magazine" wrote Friday that Cerberus and J.C. Flowers would pay around 1 billion euros in the transaction. Whereas HSH Nordbank's core business is profitable again, its large stock of non-performing loans and distressed assets have been transferred to an internal "bad bank" since 2009.
Following an investigation into HSH Nordbank on suspicion of having received illegal state aid from German authorities, the European Commission ruled in 2016 that the financial institution must be privatized.
If the transfer from state to private ownership proves successful, other troubled banks owned by regional governments in Germany, including BayernLB and NordLB, could face heightened pressure to follow suit.
