The European Central Bank has urged German state-owned lender Bremer Landesbank to shore up its capital against non-performing shipping loans, sources said, although the bank dismissed that as "wrong".
The European Central Bank has urged German state-owned lender Bremer Landesbank to shore up its capital resources against non-performing loans in shipping, three sources familiar with the matter said.
Bremer (BLB) needs another 700 million euros ($800 million) in equity, weekly magazine Focus reported on Saturday, citing talks between the city-state's finance chief and parliamentary leaders.
"There are close discussions with the ECB," one of the sources told Reuters. Strengthening BLB's capital is a "matter of intense talks," a second source said.
A spokeswoman at BLB denied that the ECB is pressuring the bank into making provisions for bad shipping loans, saying the information about the ECB as well as the level of 700 million euros of equity needed "are factually wrong and pure invention."
Germany was one of the world's main centres of global ship finance before the 2008 financial crisis, and the five German banks with the closest links to the shipping industry still have around 80 billion euros on loan to the sector.
NordLB, BLB's majority owner, and BLB itself are bracing for losses this year due to their exposure to shipping.
NordLB's rivals such as HSH, Commerzbank, DVB and KFW have also taken writedowns and boosted capital buffers against the risk of shipping loans turning bad.
The ECB on Sunday declined comment. "NordLB is sufficiently capitalised and fulfils all supervisory capital quotas," a spokesman for NordLB said, declining to elaborate.
Focus reported that BLB could provide 300 million euros by itself with shareholders accounting for 400 million euros.