HSH Nordbank strengthens equity base

Conversion of EUR 685 million in silent partnerships Capital measures prompt inflow of fresh funds totaling EUR 1.26 billion

Hamburg/Kiel, May 20, 2008 - The Supervisory Board of HSH Nordbank decided at its meeting of May 19, 2008 to propose to the extraordinary general meeting mid July an improvement in the capital structure and a substantial strengthening of the Bank’s capital base with a view to financing its growth. The capital measures have a volume of nearly EUR 2 billion. Of this figure, around EUR 1.26 billion will be fresh funds. The shareholders are in final negotiations on these measures which are still subject to approval of the bodies of the public stockholders.

he details are as follows: to improve the equity structure, all silent partnerships totaling EUR 685 million and preferred shares of EUR 57 million will be converted into common stock. At the same time as the conversions take place, the trusts advised by J.C. Flowers will sign a cash equity issue in order to avoid a dilution of their shareholdings. As a result, HSH Nordbank will receive around EUR 300 million.

In order to provide the Bank with further funds to finance its growth, the owners have decided on a new silent capital contribution totaling EUR 962 million. These silent partnerships, called mandatory convertibles, will be converted into common stock no later than December 31, 2010. If HSH Nordbank were to be listed on the stock market before this date, conversion of the partnerships would take place in the course of the IPO.

Due to these capital measures HSH Nordbank stockholder structure remains unaffected between public sector shareholders (73.39 percent) and private investors (26.61 percent).

Michael Freytag, Hamburg’s Senator for Finances, commented as follows: “We are investing in a Bank with a successful business model. The capital measures that we have decided on are aimed at supporting HSH Nordbank’s growth course.”

Rainer Wiegard, Schleswig-Holstein’s Minister of Finance, said: “HSH Nordbank is of great importance to the Northern German economic region. Many important projects have been made possible by loans, subsidiaries and equity holdings, and thanks to the capital increase this will continue.”

Jörg-Dietrich Kamischke, President of Sparkassen- und Giroverband Schleswig-Holstein, stressed the following: “The stockholders’ intentions are directed at strengthening HSH Nordbank’s outstanding competitive position further. We have now prepared the ground for this to happen.”

HSH Nordbank’s CEO Hans Berger expressed his delight at the clear commitment to HSH Nordbank that has been demonstrated by the owners. “The confidence in our objectives and strategy which our stockholders have expressed is recognition for every single staff member and an incentive for us all to continue without let-up on the successful course.”