We think recent events in the German shipping lender space could be a catalyst for NordLB’s strategic future, with domestic press speculating that either public capital is injected or that the entity is privatized, in line with developments at HSH. While the capital position of the bank appears reasonable (Q3’17 transitional CET1 ratio at 11.5%), additional resources to shore up provisions could be necessary and broadly speaking we see two alternative scenarios. We believe the bank is at a crossroads, with one route taking the bank to private investors’ hands – with Cerberus and Apollo having shown interest (Wiwo, Spiegel) – or, alternatively, a non-state-aid public capital injection within the MEIP is equally viable (Bloomberg) (a concept already employed by NordLB in 2005). Implications for bondholders are significant, with the second alternative being positive for all bondholders as MEIP precludes burden sharing with subordinated bondholders, echoing the Caixa Geral situation in early 2017. Conversely, if the bank is privatized we think the outlook for NDB 5 5/8 €P (92.5-94) is less positive on the expectation that the new owners might deploy “losses carried forward” from a higher shipping NPL coverage to extract value out of Tier 1 investors. However, in either scenario the bank should be much cleaner and, ultimately, this should be positive for Tier 2 and senior unsecured investors where we reiterate our preference for NDB 6 1/4 $24 trading at c. 370bp.