Annual Report 2009 HSH NordbaNk Group at a GlaNce Income statement (¤ m) 2009 2008 Net income before restructuring -654 -2,796 Group net loss for the year -679 -2,844 Balance sheet (¤ bn) 31.12.2009 31.12.2008 Equity 4.5 2.0 Total assets 174.5 208.4 Business volume 193.0 237.8 Capital ratios 1) (%) 31.12.2009 31.12.2008 Tier 1 capital ratio 10.5 5.1 Regulatory capital ratio 16.1 8.3 Employees 31.12.2009 31.12.2008 Total 4,188 5,070 Germany 3,490 4,087 Abroad 698 983 Full-time positions 3,610 4,325 Germany 2,958 3,398 Abroad 652 927 Unguaranteed Guaranteed Public-sector Ship Long-term ratings liabilities liabilities 2) Pfandbriefe Pfandbriefe Moody’s A2 Aa1 Aaa Aa3 Standard & Poor’s BBB+ AA- – – Fitch A AAA – – 1) Including market risk positions, after adoption of the financial statements 2) Obligations covered by Gewährträgerhaftung (guarantee obligation) HSH NordbaNk Group at a GlaNce New segment structure of HSH Nordbank Sector SpecialiSt baNk reGioNal baNk Concentration on core commitment Regional focus strengthened The Specialist Bank sector bundles HSH Nordbank’s commitment in the HSH Nordbank’s Regional Bank segment consolidates its commitment in Shipping, Transportation and Renewable Energies sectors. With its com- the Corporate Clients, Real Estate Clients, Private Banking and Savings prehensive knowhow, the Bank will continue to be an important finance Banks divisions, with their predominantly regional emphasis. The realign- partner in these business areas. After the separation from nonstrategic ment strengthens the business of the Corporate Clients division with business and its reduction in the Restructuring Unit, the Shipping division corporate clients in northern Germany. By contrast, refinancing leasing continues to serve shipping customers in all the key regions and market companies and international corporate clients has been discontinued, segments. The Transportation division remains a strong partner for the and is being reduced in the Restructuring Unit. The emphasis in the Bank’s global aviation industry. In the infrastructure (airports and seaports) Real Estate Client business is on the core northern German region and and rail sectors, Transportation focuses on the markets in Europe. As an German metropolitan regions. The Bank’s Private Banking division is cus- established specialist in the sector, the Renewable Energies division to mised for the needs of high net worth private clients. The Savings centres its commitment on the European wind power and solar markets. Banks division concentrates on allround solutions for savings banks and on debt and liquidity management for public sector clients. otHer reStructuring Unit Various activities Restructuring Unit bundles wind-down portfolios The segment Other consolidates a range of HSH Nordbank business activ- HSH Nordbank’s Restructuring Unit started work on 1 December 2009 with ities. Primarily, this segment shows financial market activities with its own Board member in charge and its own organisational structure. the central refinancing function for the Bank. The results of financial As a central element in the realignment programme, the Restructuring Unit market transactions with corporate and private clients are shown in consolidates the portfolios split off from the core business. The business the Sector Specialist Bank and Regional Bank segments. In addition, Other areas consolidated in the Restructuring Unit comprise total assets of EUR 77 shows positions for the bank as a whole, including specifically net billion at year-end 2009, and cover special capital market port folios income from strategic equity holdings, the results of the staff and service such as the credit investment portfolio, which made heavy losses in earlier departments, and net income from central portfolios which was not years, and nonstrategic loan commitments from various business areas posted to the segments. which are being discontinued to focus on the regional and sectoral core areas. The goal is to wind down these portfolios completely at an early stage, while at the same time maximising their value. HSH NordbaNk Group at a GlaNce coNteNtS Letter of the management board 02 eventfuL times 06 business divisions 16 EMPLoYEES, sociaL RESPONSIBILITY, integrity 26 GROUP MANAGEMENT REPORT 29 Underlying conditions and business overview 30 Business developments 34 Outlook 53 Risk report 59 GROUP FINANCIAL STATEMENTS 95 Income statement 96 Balance sheet 98 Explanatory notes 104 Auditor’s report 211 report of tHe SuperviSory board 213 CORPORATE GOVERNANCE 217 the members of the advisorY board of HSH nordbank 220 lorem ipsumdolor lorem ipsumdolor 1 On tHe way to SuStaiNable Stability As a result of the global financial and economic crisis, HSH Nordbank found itself in a precarious situation. Considerable weaknesses in our processes and structure became evident. We took 2009 as an opportunity to drive forward a fundamental realignment in the Bank. We cannot change the past, but we have learned less- ons from it and are taking great care to apply the knowledge we have gained. The milestones we have achieved towards a sustainable structure for the future encourage us to continue firmly on the path we have chosen. Our objective is to re-establish the Bank as a stable, reputable and successful financial institution in our region, with stable growth in value for shareholders and investors and providing winning solutions for our clients. 2 HsH NordbaNk 2009 LADIES aNd GeNTLEMeN, 2009 is a major turning point in the history of HSH Nordbank. After eventful months dominated by the global financial crisis and its often drastic effects on the economy in industry and services, the business year was characterised by a comprehensive reor­ ganisation of the Bank. With great efforts by its employees, and support from its share­ holders and external consulting firms, HSH Nordbank has reinvented itself. The realignment includes a clear partitioning into a viable core bank and a restructur­ ing unit. In the core bank, HSH Nordbank is returning to its roots. In future, it will again focus closely on its home regions of Hamburg and Schleswig­Holstein, where the Bank has over many years established a leading position in the high­end corporate client business and the real estate sector. HSH Nordbank significantly scaled back its international business in 2009, and numer­ ous foreign locations were closed. Priority areas for our activities will continue to be shipping, aircraft financing and renewable energies. As a global leader in shipping finance, we have business relationships with almost all the companies and institu­ tions in the shipping sector. Leading positions also as consultant and service provider in the project business in the renewable energy sector and aviation round out our services to the key industries in the region, where we have stable networks which we can continue to build on in the future. The Restructuring Unit consolidates the portfolios which have been split off from the Bank’s core divisions and are scheduled for winding­down. Besides the credit invest­ ment portfolio, other loan commitments are being reduced from various business areas, such as the US real estate business. The Restructuring Unit started work as planned in December 2009, with its own Board member in charge and its own organisation. In parallel with the modification to the business model, the Bank’s core processes were redefined and the associated changes implemented. HSH Nordbank has developed a new risk culture and taken key measures to protect the Bank better against fluctuations in the markets. In particular, we have made lasting improvements to accounting, risk management and the Bank’s control systems. Overall, and despite substantially reduced total assets and adverse influences from the general economic environment, the Bank has succeeded in significantly increasing total income and narrowing the consolidated loss to EUR − 679 million. The Tier 1 capi­ tal ratio is 10.5 per cent, well above statutory requirements. As a result, HSH Nord­ bank ended the 2009 financial year in line with its planning, and a return to profit in 2011 is now realistic. letter of tHe maNagemeNt board 3 The overall realignment of HSH Nordbank was possible because the states of Schleswig­ Holstein and Hamburg supported the Management Board’s reorganisation concept and assisted the Bank with a capital increase of EUR 3 billion and a risk shield of EUR 10 billion. We are very grateful for this support. The change in capital structure means that the two states now hold over 85 per cent of HSH Nordbank’s share capital. In 2009 the Bank’s owners formed a new Supervisory Board of independent financial and business experts. The new Supervisory Board is closely involved in the Bank’s reorganisation through constructive critical dialogue. HSH Nordbank’s Management Board was also extensively reorganised and strengthened in 2009. Overall, HSH Nordbank completed a comprehensive change process in the 2009 finan­ cial year with impressive speed. The internal processes are characterised by clear structures and responsibilities and increased speed. The realignment is largely marked out, and now needs to be brought to life. The course is set for the future. Many have played a role in this – the Bank’s employees, the shareholders, and also our clients, who have stayed loyal to us even in difficult times. We thank them all. We will continue to tackle the obstacles in our path with unabated energy, committed to making HSH Nordbank in its realigned form again a stable and reliable partner and service provider. Prof. Dr. Dirk Jens Nonnenmacher Dr. Martin van Gemmeren Chairman Constantin von Oesterreich Bernhard Visker 4 HsH NordbaNk 2009 MaNaGeMeNt board prof. dr. dirk Jens NonnenmacHer dr. MartiN vaN GemmereN Chairman of the Management Board, born in 1963 Born in 1970 responsible for the following divisions: responsible since 1 November 2009 for the Group Communication, Legal and Group Compliance, restructuring unit with the divisions: Corporate Development, Internal Audit, Human Wind­down Loans, Special Loans, Divestments Resources HSH Nordbank Securities S.A.