I was fascinated by the restructuring and transformation of the bank in recent years. That motivated me to move to another institution in a different country. HCOB, which I’ve gotten to know more closely in recent months, is a very strong bank with great people and a lot of expertise.

HCOB has a very well-functioning risk management system. As a commercial real estate lender, for example, it has handled the downturn in this sector well over the past years. The expertise in ship financing and project financing is also excellent.

I knew the predecessor institution, HSH Nordbank, which was sold to financial investors in 2018. I first engaged with HCOB last year when I was approached to become the CEO. I did my research and had many discussions. I was very impressed. HCOB is highly profitable, well-capitalised, and has strong liquidity. It operates a successful business model and can continue to grow profitably in the future. I see good opportunities to make HCOB even more attractive – also in the interest of the owners who may want to exit at some point.

Yes.

I was surprised that HCOB, in the past, was one of the few larger financial institutions in Germany that did not directly engage in retail deposit business, but instead used the Raisin platform. We are now planning to build direct relationships with retail deposit customers, stabilising our deposit base. Our refinancing, which has relied on corporate deposits and the financial markets, will be more diversified and cost-effective in the future. Additionally, we have identified core businesses that we want to focus on. By focusing, we will also become more attractive.

We will focus more on our core businesses with corporate clients in Germany and Europe. We can and want to deepen relationships with these clients. To achieve this, we are adjusting our structure. We have decided to divest activities that do not align with our focus. This includes a significant portion of asset-backed lending, which we will reduce over the next two years. We will also cease international real estate financing and aircraft financing.

We will cease new business in these areas, and generally, the portfolios will be reduced. However, we will also evaluate whether selling some of the portfolios might be a better option. There is no time pressure.

We are talking about a reduction volume of a total of 3.5 billion euros, which is about 10% of our current balance sheet. Additionally, we will reduce our real estate business in Germany over the next two to three years to decrease concentration risks.

We expect that we will still be supervised by the ECB in the future. There are several criteria that are relevant for a change in supervision. Size is one of them, but not the only one. Moreover, before a change in supervision, a period of several years is considered for this criterion. A shift from national to European financial supervision, and vice versa, is not a simple process.

Asset-backed lending involves financing for non-banking institutions, such as private debt institutions, which in turn lend to companies. We are in the second tier here. When purchasing asset-backed securities like Collateralised Loan Obligations (CLOs), it’s more about investment management than banking.

We have an experienced team in structured financing for clients in the aviation sector, which completed eight profitable transactions last year. But this is a global business that does not fit with our European focus. That’s why we’ve decided to discontinue this business line.

Indeed, nearly a quarter of our real estate portfolio is currently in Europe. However, we view real estate financing as a local business. One needs to have deep local knowledge about the respective country, city, and neighbourhoods. We are too small to be present in all countries and to maintain the necessary local expertise. In the future, we will focus on commercial real estate financing in Germany, where we have traditionally been strong. We consider business outside Germany too risky for an institution of our size.

We expect a 10% reduction in balance sheet size and about 20% of the workforce. At the end of 2024, the number of full-time employees was 934, so HCOB will have to operate with roughly 200 fewer positions.

The affected businesses will be discontinued over the next two years, that is, by the end of 2027. This will go hand in hand with the aforementioned job cuts.

No. We are sticking to our strategic course. HCOB will be a more focused institution. We want and will grow in the business with corporate clients, faster than before. We want business that creates value for our customers, for the bank, and for its shareholders. For a new strategic owner, I want to make HCOB as attractive as possible.

We are primarily focused on Germany but also on Europe in certain areas. These include project financing for renewable energies and infrastructure, for which we see opportunities due to political decisions, such as the 500 billion euros special fund approved by the new German government. Our core European businesses also include shipping finance. In this business, we are active in Germany, Scandinavia, the UK, the Netherlands, and Greece. We also have a branch in Piraeus. In Germany, in addition to commercial real estate financing, we are active in financing corporate clients, including leasing and factoring.

There will be agreements related to the job cuts, which will involve provisions. I cannot yet specify the extent of the provisions and transformation costs. We are currently in talks with employee representatives to ensure a socially responsible downsizing.

Yes. However, we will still remain a very profitable bank. HCOB will be able to absorb the burden from the business adjustments due to its sustainably solid earnings.

We are sticking to our current financial goals but will assess whether adjustments are necessary. We see the planned discontinuation of certain businesses as more of an adjustment, not a restructuring.

The cost-income ratio should be around 40% in the medium term, with a return on equity of 10%.

It has always been clear that HCOB needed to prepare as well as possible to enable an exit by its current owners and find a new strategic investor. I was brought in to facilitate this. The bank is attractive and well-capitalised, but it needs to focus further and align itself with the core businesses that suit it to become more attractive to strategic investors.

That is media speculation. But I have also heard other potential buyers mentioned.

Well, that’s a possible option. But I consider an IPO for HCOB to be rather unlikely.

The external conditions are not favourable. Significant fluctuations in the capital markets are not a good environment for IPOs. If you look at HCOB’s profile as a highly profitable bank with a robust capital base and strong liquidity, it seems more likely that we will sell to a strategic investor rather than go public. I don’t rule out an IPO, but I consider a sale to a strategic investor more probable.

The case shows that there are interested parties and buyers for German banks owned by private equity investors. Given our strong metrics, I’m very confident that there will be significant interest in HCOB as well. My goal is to make the bank even more attractive.

I don’t rule out acquisitions. However, as part of the planned refocusing, they would be smaller acquisitions, for example, of individual portfolios. Last year, for example, we acquired a ship portfolio from NIBC Bank with a volume of about 1 billion dollars and successfully integrated it within a few months. But acquisitions are not our primary focus right now. What matters most is adjusting the business model.

Yes. In our current planning, we expect to increase pre-tax profit from around 250 million euros last year to about 300 million euros and improve the cost-income ratio by about 5 percentage points to 45%. The return on equity after taxes should exceed 7%, compared to 6.2% last year. Mid-term, we aim for a pre-tax profit of 400 million euros. We are sticking to this outlook.

We want to grow in our core businesses, no question about that. However, a precise forecast cannot be given because market conditions are constantly changing. Since we are adjusting the business model, the volume of new business in 2025 may be slightly lower than last year. But government plans in Europe for significantly higher investments in infrastructure and defence indicate a positive development.

We finance the sector based on our strict guidelines. We only finance companies that produce military equipment on behalf of state institutions and are not subject to sanctions from the European Union, the United Nations, or the US. We want to ensure that defense goods we potentially finance end up in the right hands.

At the end of 2024, it was around 200 million euros.

The quality of HCOB’s loan book is very high. When I took on a new responsibility at another bank, I of course looked closely at the loan portfolio and the share of problem loans in advance. The share of problem loans decreased from 2.3% to 1.9% in 2024, despite another difficult year in the real estate sector. I believe further improvement of the ratio is possible this year. The risk management at HCOB works very well. I have been impressed by this from the beginning.

So far this year, the risk provisioning has been unremarkable, and we currently do not see any major challenges in the remaining part of the year. Additionally, the bank has a very solid risk provisioning buffer.

Our net interest margin improved by 20 basis points to 234 basis points in 2024. That’s a very high level. I would be pleased if we could maintain this level, even though it is challenging. We operate as a financier in an attractive niche, where we can efficiently support the economy. We have strong customer relationships, and I’m confident that by focusing on our core businesses, we can become even more profitable.

For 2024, we will distribute 214 million euros. The shareholders decide on the dividend policy.