February 16, 2018 / 11:18 AM / 9 months ago

HSH Nordbank to post higher earnings as nears sale: sources

BERLIN (Reuters) - Germany’s HSH Nordbank has more than doubled its 2017 pre-tax profit, two people close to the matter said, as negotiations on a sale of the troubled ship financier near completion.

The HSH Nordbank is pictured in downtown Hamburg, October 25, 2014. REUTERS/Fabian Bimmer

The state owners of HSH Nordbank last month agreed to exclusive talks with buyout groups Cerberus and J.C. Flowers and a deal may be struck by the end of the month, they said.

The public-sector bank is expected to post full-year pre-tax earnings of just below 300 million euros ($375 million), compared to 121 million euros in 2016, they added.

HSH declined to comment, while the bank’s owners and the private equity firms were not immediately available for comment.

The bank’s owners and its private equity suitors have agreed on the main points of the planned sale of the bank, the sources said.

Negotiations on last details are ongoing, focusing among other things on the size of non-performing loan portfolios that would be taken out of HSH and sold to separate investors.

Any such divestiture would also affect staff numbers.

In the medium term, one out of three jobs are seen at risk in the wake of the privatization and the bank’s staff numbers may decrease to 1,300-1,400 from the current 2,000, one of the people said.

Private equity groups typically cut costs at companies they buy with a view of boosting earnings and selling them for a higher price after a restructuring and new strategic set-up.

While buyout firms typically hold investments for 3-5 years, Cerberus and J.C. Flowers’ investment horizon is about 7 years in HSH’s case, the sources said.

($1 = 0.7999 euros)

Reporting by Klaus Lauer; Writing by Arno Schuetze; Editing by Georgina Prodhan

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