Buyout group Cerberus is in exclusive talks with NordLB to take on 2.5 billion euros ($2.8 billion) of non-performing shipping loans that the German public sector lender wants to shed ahead of a planned stake sale, sources close to the matter said.
The divestment of the portfolio dubbed “Big Ben” is contingent on a deal that NordLB is aiming to strike in early December to shore up its balance sheet and cover writedowns on the value of any loans it sells.
NordLB on Monday also received final bids for a second tranche of loans – worth roughly 4 billion euros and dubbed “Tower Bridge” – from Cerberus, private equity firm Lone Star and hedge fund Davidson Kempner, the sources said.
One of the suitors will be allowed to enter exclusive talks as early as next week, they added.
NordLB declined to comment, while Cerberus and the other suitors either declined to comment or were not immediately available for comment.
The bank is trying to shed almost all of its non-performing shipping loans this year. It scored worst among German lenders in European Union regulatory stress tests and its majority owner, the German state of Lower Saxony, has said it is working on strengthening NordLB’s capital buffers.
Bidders for a stake in the bank have been asked to submit final offers in late November, with public sector bank Helaba, Germany’s second-largest listed lender Commerzbank (CBKG.DE) and private equity investors including Cerberus, Apollo and Advent short-listed in the sale, people close to the matter have said.
The bank and its shareholders, which include regional savings banks, want to restructure NordLB in a way that avoids breaching EU state aid rules that could force a complete sale.