Nordlb reports billion-dollar loss as it presents 2018 financial statements
Norddeutsche Landesbank (NordLB) reported a loss of €2.3 billion in its 2018 financial statement presentation. This unexpectedly high loss is mainly attributed to the high risk provisioning for its ship financing operations.
NordLB has long focused on ship financing and was one of the largest financiers of the maritime industry worldwide. However, the shipping segment has proven to be very volatile in recent years and NordLB has suffered losses due to write-downs and impairments.
In order to minimize the impact of the shipping segment on the bank’s balance sheet, NordLB has already announced a restructuring of its shipping portfolio. The bank is also planning a capital increase to strengthen its capital base and secure its position on the market.
NordLB is part of the Landesbank family and is 60 percent owned by the states of Lower Saxony and Saxony-Anhalt. The bank employs 6.000 employees and has its headquarters in Hanover.
NordLB losses due to high risk provisions for ships
NordLB suffered a large loss in 2018, mainly due to high charges for risk provisions for ships. The bank is still heavily involved in the shipping sector and has invested large sums in ship financing in recent years.
However, the high risk provisioning for ships has now landed NordLB in trouble. Many of the ships the bank has financed are no longer profitable due to weak market conditions and oversupply of vessels. The bank now has to raise large sums to cover its debt and has to accept losses.
To counteract these losses, NordLB has already taken steps to improve its situation. This includes strengthening equity through a capital increase, but also reducing exposure to the shipping sector.
NordLB hopes these measures will help it to stabilize its financial situation again and avoid losses in the future. Nevertheless, risk provisioning for ships remains a major burden for the bank and highlights the importance of good risk analysis and provisioning in the financial industry.