After almost going bankrupt due to ship loans, NordLB is also withdrawing from the aircraft financing business after more than 40 years.

The Landesbank from Hanover is selling a loan portfolio of 1.67 billion euros to Deutsche Bank, as both sides announced on Monday, without commenting on the price. The deal is expected to be completed in the second half of the year. The remaining part of the loan portfolio with aircraft financing of around 1.1 billion euros will remain with NordLB and is gradually being phased out. There will be no more new business. Norddeutsche Landesbank (NordLB) intends to focus more on renewable energies in the future.

"With this decision, we are now taking the next step and focusing even more strongly on implementing the energy transition in our selected growth areas of renewable energies, commercial real estate and corporate clients," explained NordLB CEO Jörg Frischholz. These areas can now be expanded with the capital that has been freed up.

Last year, profits in the aircraft financing business slumped by 92 percent to 15 million euros. The approximately 50 employees from this area will be able to move to equivalent positions within NordLB. According to the bank, the current aircraft portfolio amounted to around 2.75 billion euros at the end of March and comprises around 300 financed aircraft and engines. The majority of the financing is expected to be gradually transferred to Deutsche Bank from the end of June. "The loans, which are backed by a large number of lessors and airlines as customers, are collateralized by passenger aircraft," explained the Frankfurt-based bank. "With this transaction, we are leveraging our strengths and experience in the aviation industry while acquiring a portfolio of high-quality loans with an attractive yield profile," said Ross Duncan, co-head of the Global Transportation Finance team at Deutsche Bank. According to NordLB, the buyer prevailed in a bidding process against many national and international bidders.

NordLB had made a mess of itself with bad shipping loans and made a total pre-tax loss of around four billion euros in 2016 and 2018. At the end of 2019, the bank had to be rescued by its owners with a capital injection of 3.6 billion euros.

(Report by Klaus Lauer and Tom Sims; edited by Ralf Banser - If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).