At HSH Nordbank, CEO Hans Berger is too busy preparing for an IPO to be concerned about the debate over Landesbanken consolidation or what role his bank could play in it.

The preparations range from the banal, like adopting international accounting standards and quarterly reporting, to the difficult, like ensuring that the bank is profitable and creditworthy enough. A quick study of HSH Nordbank – a product of the 2002 merger of the Landesbanken for Hamburg and Schleswig-Holstein – shows that the bank is ready to float. Two years after losing its state guarantee, Moody’s gives it a double-A long-term debt rating. In terms of profitability, HSH Nordbank sits between Nord/LB and LBBW, with a RoE of 15%. “We also plan to raise RoE on a consistent basis to 17% in the near future. This is a better approach than 20% in one year, 11% the next and 15% after then,” says Mr Berger, speaking to The Banker during a business trip to Frankfurt.

The story behind HSH Nordbank is equally compelling. Internationally, it is known as the world’s leading shipping financier, with a credit portfolio of €21bn. What many outside of Germany may not know, however, is that the bank is also a leading commercial real estate financier, with a credit volume of €27bn and operations in six European countries (excluding Germany) and in the US. Like Nord/LB, HSH Nordbank is a leading aviation financier and has a big presence in the Baltic region – albeit serving corporate rather than retail clients. In all, 60% of its revenues come from outside Germany.

Yet Mr Berger stresses that, despite HSH Nordbank’s international focus, the Landesbank has not neglected its home base. “Our core region is the states of Schleswig-Holstein (S-H) and Hamburg, where we have a 25% share of the corporate client market. And because Hamburg accounts for a large portion of our shipping finance activities, we will stay fully anchored in the region,” he says.

Mr Berger says he believes that the coming IPO will not change things much either. In the move, between 25% and 30% of the bank’s share capital is due to be floated, permitting the governments of Hamburg and S-H to reduce their ownership. But the CEO notes that both states, along with S-H Sparkassen, have pledged to retain a majority stake in the bank until 2013.

Regarding the JC Flowers-led consortium, which has a 26% stake, Mr Berger expects this private equity shareholder to remain engaged even after the IPO. “The consortium has agreed to remain a shareholder until 2010 even if there isn’t an IPO. So I think we’re talking about a long-term investor, and we need investors like that to maintain a stable ownership structure,” he says.

Sceptics say that Mr Berger is under-representing the influence that private equity mogul Christopher Flowers is exerting over the bank. “From what I hear, Mr Flowers is running the show over there now, whipping the bank in shape for the IPO. I think it’s fair to say that HSH Nordbank will be quite a different institution in the near future,” says a senior Landesbanker who is familiar with the place.

Mr Flowers’ influence is already being felt at HSH Nordbank, but it sounds positive. According to Mr Berger, his bank is in talks about deepening co-operation with Dutch merchant bank NIBC and Shinsei Bank of Japan. NIBC is currently controlled by JC Flowers, and Shinsei was acquired by the private equity firm in 2000 and floated four years later after a successful turnaround.

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