HSH Nordbank recognises provision for cum-ex-transactions in the years 2008-2011

Interim report contains indications for potential groundless credits of withholding tax
Precautionary tax provision in the amount of EUR 127 million
Relevant authorities have been informed about the interim results

Hamburg/Kiel, December 17, 2013 - Today, the management board of HSH Nordbank considered an interim report prepared by the law firm Clifford Chance in the context of its investigation on cum-ex-transactions – a special kind of equity arbitrage – in the years 2006 to 2011.

Because of media coverage on transactions in the whole banking industry with perhaps groundless withholding tax credits in the context of equity arbitrage transactions over the dividend record date, the management board of HSH Nordbank had pro-actively initiated an independent investigation already in December 2012.

Based on the interim results, there have been no suspicious transactions in the years 2006 and 2007. In the year 2008 to 2011, 29 suspicious transactions have been indentified and are currently subject to further investigation. The total withholding tax credit possibly at risk amounts to EUR 112 million. On such amount, about EUR 15 million of interest accrued to date.

Before the middle of 2011, it could happen in the stock trading with foreign counterparties around the dividend date that withholding tax credits were made in Germany although no withholding tax had been paid. The tax treatment of such transactions is unclear; a clarification by the German Federal Tax Court has yet to come.

"The investigation of the facts and circumstances initiated by us is still ongoing. There is circumstantial evidence in respect of some transactions pursuant to which the bank might have credited withholding tax even though no withholding tax had been paid. Therefore, the management board decided today to make a precautionary tax provision in the annual accounts 2013 of in total EUR 127 million for potentially groundless withholding tax credits in the years 2008 to 2011 in the amount of EUR 112 million plus accrued interest of about EUR 15 million and to initiate the repayment," said Stefan Ermisch, chief financial officer of HSH Nordbank.

The results of the external investigation are currently expected for the end of the first quarter 2014. In the meantime, all means internally available will be used to clarify the details of the relevant transactions. Today, the management board has promptly informed the tax authorities, the Federal Financial Supervisory Authority (BaFin) as well as the Hamburg department of public prosecution about the current status of the investigation. In the audit committee of the supervisory board of HSH Nordbank, the topic will be discussed in an extraordinary session on Wednesday.

"It is imperative for the management board to review possible dubious transactions of the past so that new trust in HSH Nordbank can be built," said Stefan Ermisch, chief financial officer of HSH Nordbank.