Munich (Reuters) – The federal government can put one of the legacy issues from the financial crisis on file.
The Irish Depfa Bank is sold to the Austrian Bawag PSK twelve years after the collapse of its former parent company Hypo Real Estate (HRE). The state HRE processing company FMS Wertmanagement (FMSW) announced on Monday in Munich that the sale price had not been disclosed. For the FMSW and the state it has obviously paid off: “The bottom line is that the sale of Depfa is a successful conclusion from the point of view of the German tax payer,” said FMSW board spokesman Christoph Müller.
The decision not to sell Depfa as early as 2014 but to dock it with FMSW has proven to be the right one, explained FMSW Board Chairman Michael Kemmer. The HRE “Bad Bank” had accelerated the liquidation of Depfa in recent years and officially put it up for sale in summer 2020. From 2014 to mid-2020, Depfa’s total assets shrank from 48.5 billion to 6.9 billion euros. It essentially still contains European government bonds and public sector loans in Western Europe.
Bawag can further reduce the portfolio and later benefit from the excess capital: In mid-2020, Depfa still had 634 million euros in equity. It had already paid a dividend of 150 million euros to FMSW. Bawag CEO Anas Abuzaakouk explained the acquisition as follows: “The takeover of Depfa represents an attractive and capital-increasing investment opportunity. It enables us to acquire high-quality assets with low risk, to use our balance sheet and to fall back on our infrastructure and operational capabilities.”
The risky refinancing of Depfa had caused HRE in 2008 in difficulties, so that it had to be absorbed by the state. The HRE successor pbb had already tried to sell it in 2013. But the federal government decided at that time to instead give Depfa to its own “bad bank” FMSW for 323 million euros. This brought out a total of 377 million euros in special prizes in 2018 and 2019 alone. That “even clearly exceeded our own expectations,” said Müller.
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