German bad bank says Depfa sale is an option
The German state’s bad bank tasked more than three years ago with winding down Dublin-based Depfa Bank has confirmed that a sale of the former public-sector lender is being considered.
Depfa was bought by Munich-based Hypo Real Estate in 2007, a year before the Irish bank ran into funding problems in the wake of the collapse of Lehman Brothers.
While Hypo Real Estate agreed to sell Depfa under a restructuring plan tied to its own bailout during the financial crisis, the German government pulled the sale in 2014 and transferred the business to state-owned bad bank, FMS Wertmanagement (FMS-WM).
FMS-WM said yesterday as it reported full-year results that “besides pursuing the successful wind-up strategy, selling the Depfa Group or parts of it is also a possible option”.
The Irish Times reported last October FMS-WM was weighing a second attempt to sell Depfa. However, it is likely FMS-WM would seek to take out the bank’s excess capital before going about a disposal.
Figures in Depfa’s annual report suggest the bank was sitting on up to €812 million of excess equity capital. Any move to remove capital would need the approval of the Central Bank. A series of asset and liability transactions with FMS-WM have helped Depfa to reduce its total assets by 60 per cent since the end of 2014 to €18.6 billion in December.