Berlin  - Germany's publicly owned HSH Nordbank AG became on Tuesday the latest bank in the country to receive state aid to help it through the current global financial crisis.

Two German state governments - Schleswig-Holstein and Hamburg - agreed to to throw HSH a 13 billion-euro (16.6 billion dollar) financial lifeline to cover future losses incurred by the shipbuilding financier.

The bailout, which was announced by Schleswig-Holstein Premier Peter Harry Carstensen and Hamburg Mayor Ole von Beust, includes a capital injection of more than 3 billion euros and state-backed guarantees worth more than 10 billion euros.

The two states were forced to mount the action after the bank rescue fund set up by the federal government ruled out action to underpin HSH Nordbank until it restructured its bad debts.

The Schleswig-Holstein and Hamburg state governments each hold 30 per cent in Hamburg-based HSH.

In addition, the US investment group J. C. Flowers & Co, which also a stake in HSH, has indicated it is considering contributing to the capital increase.

In the meantime, HSH has launched a major restructuring, including slashing its workforce, after posting a pre-tax loss of 2.8 billion euros in 2008.

Last week the German Chancellor Angela Merkel's cabinet in Berlin agreed to steps that would be enable the state to take control of troubled banks.

The cabinet approved legislation that will allow Germany's Federal Government to seize control of Hypo Real Estate (HRE), a Munich-based mortgage lender that has been also hit hard by the financial crisis. (dpa)