By Arno Schuetze and Hans Seidenstuecker
FRANKFURT, Oct 8 (Reuters) - The German government has
started preparations to sell state financier Depfa as it seeks
to draw a line under the country's largest bailout of the
financial crisis a decade ago, people close to the matter said.
Ireland-based Depfa is a former unit of Hypo Real Estate
(HRE), which Germany nationalised in 2009. An attempt to sell
Depfa for 320 million euros was scrapped in 2014 and the lender
was instead transferred to the HRE bad bank FMS Wertmanagement
(FMSW).
FMSW has mandated Barclays to find a buyer for
Depfa, which has a book value of about 900 million euros ($988
million) and could be valued at 0.6-0.8 times that in a
potential deal, the people said.
FMSW and Barclays declined to comment.
FMSW Chief Financial Officer Christoph Mueller said in April
that a sale of Depfa could be launched in 2020.
The lender is expected to attract interest from banks, which
can make use of Depfa's strong capital basis - the result of
de-risking its portfolio over the last decade.
FSMW will likely market Depfa to German public-sector bank
Helaba, which bought municipal lender Dexia Kommunalbank in
2018, as well as to Austrian infrastructure lender
Kommunalkredit and private equity firms such as Lone Star.
Germany nationalized Hypo Real Estate in 2009 after
injecting 10 billion euros of capital and providing 145 billion
euros in liquidity guarantees. The bank collapsed due to massive
writedowns among other things on Depfa's holdings of
mortgage-backed securities, which slumped in value after the
failure of U.S. investment bank Lehman Brothers.
Depfa, which had been bought by Hypo Real Estate for 5.2
billion euros in 2007, stopped underwriting new business on EU
demands after the HRE bailout and focused on winding down its
assets and shrinking its capital base.
In the first six months of 2019, Depfa posted a pre-tax loss
of 67 million euros. Total assets stood at 14.4 billion euros
and its core equity tier 1 ratio at 144% at the end of June,
according to its half-year report.
($1 = 0.9107 euros)
(Editing by Michelle Martin)