Germany’s troubled Commerzbank has successfully sold off a portfolio of real estate loans in Britain to US investors. The deal is said to be the biggest in Europe’s property sector since the 2008 financial crisis.
Commerzbank, Germany's second-largest lender, announced on Monday that it had sold its commercial real estate-financing portfolio in Britain to a consortium comprising the US bank Wells Fargo and the private equity fund Lone Star.
The deal also included the entire operational business of the Frankfurt-based Hypothekenbank in Britain, according to a statement.
The transaction covered loans totaling 5 billion euros ($6.5 billion), and was one of the largest in Europe's commercial real estate sector in recent years, the statement noted.
The deal is intended to help Commerzbank reduce its noncore assets business and its holdings of nonperforming real estate loans.
Commerzbank was substantially hit by the 2008/2009 financial crisis and needed a government bailout worth 18.2 billion euros to rescue it. After a capital increase earlier this year, the bank in May was able to reduce the German government's stake from 25 percent to 17 percent.
The sale price of the real estate deal was not disclosed, but Commerzbank said the transaction would result in a charge of some 179 million euros on its balance sheet.
“We are accepting a charge to take out risk costs in the coming years,” said Commerzbank's chief financial officer, Stephan Engels.
Investors cheered the news, causing Commerzbank's shares to gain over 3 percent on the Frankfurt Stock Exchange on Monday.
Stocks in the bank were also boosted by speculation that the government was considering selling part of its stake to the Swiss bank UBS.
A spokesperson for the German Finance Ministry said, however, that a sale of government stakes in Commerzbank was currently not foreseeable.
Commerzbank shares held by the government are currently worth an estimated 1.2 billion euros. The bank's share price of 6 euros would have to surge above 30 euros for Berlin to be able to cover the costs of the bailout.
uhe/mkg (dpa, Reuters, AFP)