Cerberus, Centerbridge Said to Bid for Stake in Lender NordLB

(Bloomberg) -- Cerberus Capital Management and Centerbridge Partners filed an 11th hour joint bid for a minority stake in ailing German lender NordLB, people familiar with the offer said.

The rival private equity investors decided at the last moment to team up, submitting an undisclosed offer for 49.8 percent of the core assets of the regional wholesale bank early Saturday morning after last night’s deadline was extended, said the people, who asked not to be identified because the talks are private. As part of the proposal, the two would inject more than 1 billion euros ($1.14 billion) into the lender, with the German state of Lower Saxony, the controlling owner, also providing fresh funding, the people said.

NordLB, which is seeking to replenish more than 3 billion euros in capital eroded by souring shipping loans, said in a statement Saturday that it had received one offer and was still open to a state-led solution that would result in other regional lenders stepping in to provide the needed funding. Cerberus and Centerbridge declined to comment.

Read more about how a NordLB failure could ripple through the savings banks.

NordLB is one of the biggest so-called Landesbanken in Germany -- wholesale lenders that cater to the almost 400 local savings banks known as Sparkassen. Efforts to reach an agreement to recapitalize the company hit an impasse last month that threatened to send ripples through a key pillar of the banking system. Its owners’ options to help are limited by European rules on state aid.

The bid does not include the consumer unit, which would remain in the Sparkassen system, the people said. Cerberus is in separate talks to buy the bank’s shipping loan portfolios, they said.

The lender -- which had the lowest capital ratio among German banks in a recent stress test -- is one of several regionally owned banks under pressure to consolidate. The bank that would be formed under the proposed bid would have a CET1 ratio of at least 14 percent, the people said.

The offer proves that the bank has “good potential,” Lower Saxony Finance Minister Reinhold Hilbers said on Saturday, emphasizing the need to find a lasting solution. The German states of Lower Saxony and Saxony-Anhalt are currently NordLB’s majority owners, with other regional savings banks holding stakes are well.

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