German Lenders to Discuss Last-Minute Bid to Save NordLB

(Bloomberg) -- Efforts to save ailing German regional lender NordLB are taking yet another turn before a deadline for final bids later this month.

Senior representatives of Germany’s savings banks association DSGV are poised to meet Monday to discuss a potential bid for the lender, which needs to come up with more than 3 billion euros ($3.4 billion) to replenish capital eroded by souring shipping loans, people familiar with the matter said.

According to one proposal, public sector banks could inject about 1 billion euros in fresh equity into NordLB should talks with private equity bidders fail. Helmut Schleweis, the head of the DSGV, has been trying to get the lenders on board for months, the people said. They added that the bulk of the 1 billion euros would have to be coughed up by Lower Saxony’s savings banks, which own 26 percent of NordLB and have so far been reluctant.

The rest of the money would come from the state of Lower Saxony, NordLB’s majority owner. Reinhold Hilbers, the finance minister of Lower Saxony and supervisory board head of NordLB, will meet with representatives of DSGV this week to discuss options, another person said.

NordLB declined to comment. A DSGV spokesperson said that various options for NordLB are being reviewed, without giving details. A spokesperson for Lower Saxony said that talks with financial investors are ongoing and that the state is open to other solutions.

The meetings come ahead of a Jan. 25 deadline at which private equity suitors are asked to submit final bids for taking a stake in the bank, the people said, declining to be identified because talks are private.

Private equity firm Cerberus Capital Management LP may have an edge over bidders like Centerbridge Partners LP because it has more experience with German banks and is also bidding for soured shipping loans that NordLB is trying to sell in a separate auction, the people said.

Still, lawmakers and regulators are urging the savings bank sector to be ready to save NordLB if needed, people familiar with the matter told Bloomberg in December. The bank acts as a wholesale lender for savings banks in Lower Saxony and Saxony-Anhalt.

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