HSH Nordbank makes use of guarantee fund

Guarantee facility ensures credit supply for industry Encouragingly stable operating income of a good EUR 1.5 billion Consolidated loss of EUR 360 million after nine months

Hamburg/Kiel, November 3, 2008 - The Management Board has decided to make partial use of the German government’s package of measures aimed at stabilizing the financial market. The Bank’s Supervisory Board acknowledged and approved this decision at its extraordinary meeting held in Kiel today.

Accordingly, HSH Nordbank will apply to the Financial Market Stabilization Office for a guarantee facility totaling EUR 30 billion. Around half of this amount will be drawn down with a view to supporting the Bank’s successful business model and the second half is used as a precautionary measure in the event the turbulences on the financial markets make the coverage of further risks necessary.

In the view of HSH Nordbank, the package of measures passed by the German government has made an extremely important contribution to stabilizing the financial market. Now it is up to the banks themselves to help make these measures successful by taking advantage of the offer. “The guarantees now applied for represent a major step toward shoring up the competitiveness of our Bank. They will enable us to once again fulfill our responsibility for supplying industry with sufficient credit in our core business areas, above all in our home region of Hamburg and Schleswig-Holstein”, said Hans Berger, CEO of HSH Nordbank to journalists in Kiel.

In the light of the still planned IPO, which however is not going to happen in the current market situation, the Bank is looking into possibilities of recapitalization on the basis of the Financial Market Stabilization Act. This step it to be taken in particular against the backdrop of the marked international increase in equity ratio requirements for banks. “If major competitors are now operating on the market with much improved capital ratios, we cannot remain indifferent to this”, said Hans Berger, CEO of HSH Nordbank, to journalists in Kiel. Mr. Berger continued: “However, we are not under time pressure and will be holding in-depth discussions with our stockholders as to the strategy to pursue.”

At the meeting of the Supervisory Board, Mr. Berger also gave an overview of the provisional results for the first nine months of this year, which have not yet been given an auditor’s certificate. With operations remaining gratifyingly stable and interest and commission income of a good EUR 1.5 billion, after nine months the Bank has posted a consolidated loss of almost EUR 360 million. This figure includes writedowns with an effect on earnings of EUR 720 million gross, which also cover the consequences of the Lehman bankruptcy. Changes in the valuation of the securities portfolio caused earnings improvement of EUR 330 million. Furthermore, in the 3rd quarter the Bank completely absorbed the charges resulting from its exposure to nationalized Icelandic banks amounting to approximately EUR 250 million.

Mr. Berger went on: “Of course, this is not a satisfactory result, especially since it is for the first time since the outbreak of the financial crises we have to account for a loss. Despite this it does show that our successful business model and operating strength are solid foundations in these turbulent times.”

The CEO is confident that by taking advantage of the government guarantees, in combination with the program announced in September aimed at enhancing its financial strength, the Bank’s prospects are good. “We believe we are on the right track toward successfully continuing our business strategy in our core areas of business,” said Mr. Berger.