Cerberus and Centerbridge seek minority stake in NordLB
Private equity groups join forces to table bid for ailing state-owned German lender
In an eleventh hour twist over the future of ailing German lenderNordLB, rival private equity groups Cerberus and Centerbridge have joined forces to table a joint bid for a minority stake in the state-owned bank.
NordLB, which is majority-owned by the German states of Lower Saxony and Saxony-Anhalt with regional saving banks holding a minority stake, is under intense pressure from European regulators to lower its exposure to toxic shipping loans and to quickly raise around €3.5bn of fresh equity.
Until Friday afternoon, when a bidding deadline for a stake in NordLB was extended by one day, Cerberus and Centerbridge had been in separate negotiations over the acquisition of a stake of up to 49 per cent in NordLB.
The state of Lower Saxony stands ready to inject money alongside the private equity investors to bolster the lender’s equity buffers.
Regulators in recent weeks signalled to the owners that a forced wind-down of the Hannover-based lender with €155bn in total assets and more than 6000 employees was the next step should the lender fail to raise the necessary capital quickly, people with first hand knowledge of the discussions told the Financial Times.
NordLB sits on non-performing shipping loans with a headline value of €7.3bn and last November was one of the three worst performers in EU banking stress tests.
Attempts to merge NordLB with Frankfurt-based Landesbank peer Helaba fell apart in late December when Helaba formally terminated the talks.
Behind the scenes, the German Savings Banks Association, the state-owners of NordLB and regional savings banks are frantically trying to engineer an alternative public-sector rescue for NordLB which would prevent the part-privatisation of Germany’s fourth-largest Landesbank, which also operates a local savings bank in the city of Braunschweig.
Senior people familiar briefed on the situation said a public sector solution was still seen as the most likely scenario. “The Sparkassen group has a tendency to find a compromise only when it’s five minutes past midnight”, one person said.
NordLB and the State of Lower Saxony on Saturday confirmed a joint bid of two private equity investors but did not name them. Two people briefed on the matter told the Financial Times that the investors were Cerberus and Centerbridge.
Cerberus is engaged in separate negotiations over the sale of NordLB’s toxic shipping portfolio, which the lender wants to hive off in a separate transaction.
Both private equity groups declined to comment.
Cerberus is already the biggest shareholder in recently privatised Landesbank HSH and among the largest investors in Germany’s largest lenders Deutsche Bank and Commerzbank, having invested an estimated total of €4bn into the country’s financial sector.
“We just don’t buy the notion that German banks cannot earn their cost of capital,” Cerberus co-chief executive Frank Bruno told the Financial Times, adding that achieving this “does not require incredibly sophisticated fixes. This is basic blocking and tackling and doing things that are being done by a lot of other banks in Europe and in the US.”
NordLB chief executive Thomas Bürkle on Saturday said that the lender would “thoroughly evaluate the offer of both investors”, adding that the way forward would be decided jointly with the lender’s owners.
Lower-Saxony’s Finance Minister Reinhold Hilbers said that the bid, which “is outlining a future vision for NordLB”, was a confirmation “that the bank has a good potential”.
Mr Bürkle and Mr Hilbers said that they were “still open for a public sector solution”.