DGAP-UK Regulatory Service: Commerzbank AG / Miscellaneous
Commerzbank AG: Commerzbank sells commercial real estate financing
portfolio in Great Britain
15.07.2013 / 12:00
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- Sale of commercial real estate loans totalling EUR 5.0 bn to consortium
comprising Wells Fargo and Lone Star Funds
- Transaction encompasses entire operational commercial real estate
financing activities of Hypothekenbank Frankfurt in Great Britain with
transfer of employees to Wells Fargo
- Low discount to book value of approximately 3.5% shows fair valuation
of portfolio
- Clear improvement in risk profile with reduction of EUR 1.2 bn in
volume of non-performing loans
- Reduction target for the Non Core Assets segment of EUR 93 bn until the
end of 2016 attained more quickly - new reduction target lowered to
significantly less than EUR 90 bn
- Transaction as a whole has no notable impact on Core Tier 1 ratio
Commerzbank today signed an agreement on the sale of its commercial real
estate financing portfolio (Commercial Real Estate, CRE) in Great Britain
to a consortium comprising Wells Fargo and Lone Star Funds. The transaction
encompasses commercial real estate loans totalling EUR 5.0 billion
including the relevant interest-rate and currency hedging derivatives, as
well as the entire operational business of Hypothekenbank Frankfurt in
Great Britain. This is one of the largest transactions in commercial real
estate loans in Europe of the past years. The employees are being
transferred in the framework of their existing employment contracts to the
purchasers. It was agreed that confidentiality be maintained on further
details of the contract.
Due to this transaction with complete risk transfer to the buyers,
Commerzbank will attain its original reduction target of EUR 93 billion in
the Non Core Assets (NCA) segment more quickly than planned. The Bank now
assumes that the exposure at default (EaD, incl. non-performing loans) will
be significantly less than EUR 90 billion at the end of 2016. The volume of
non-performing real estate loans is decreasing by EUR 1.2 billion.
Following the sale, Commerzbank internally classifies less
than 12% of the EaD in the CRE sector (excl. non-performing loans) as
'higher risk' ('higher risk cluster'). That compares with a share of 21% as
of the end of March 2013 and even 24% as of the end of the third quarter of
2012.
The Bank expects that the overall result in 2013 will see charges of EUR
179 million as a consequence of the transaction (Q2 approximately EUR 134
million; Q3 approximately EUR 45 million). The discount on the book value
of the loan portfolio of around 3.5% is low measured against similar
transactions.
Due to the transaction the risk-weighted assets (RWA) are being reduced by
EUR 1.5 billion. Thus the above mentioned overall charges in 2013 contrast
with a positive equity capital effect totalling EUR 133 million in Q3. In
total, the transaction has no notable impact on the Core Tier 1 equity
level of Commerzbank.
'With this transaction, we are accepting a charge on earnings in 2013, to
take out risk costs in the coming years. The positive capital effect from
the RWA reduction compensates largely the charge to the equity capital
ratio. This portfolio sale is attractive from a risk perspective since we
transfer future risk from our UK operating platform to the buyers,' said
Chief Financial Officer Stephan Engels.
*****
Press contact:
Simon Steiner +49 69 136 46646
Nils Happich +49 69 136 44986
*****
About Commerzbank
Commerzbank is a leading bank in Germany and Poland. It is also present
worldwide in all markets for its customers as a partner to the business
world. With the business areas Private Customers, Mittelstandsbank,
Corporates & Markets and Central & Eastern Europe, it offers its private
and corporate clients as well as institutional investors the banking and
capital market services they need. With some 1,200 branches Commerzbank has
one of the densest branch networks among German private banks. In total,
Commerzbank boasts nearly 15 million private customers, as well as 1
million business and corporate clients. In 2012, it generated revenues of
just under EUR 10 billion with approximately 56,000 employees on average.
*****
Disclaimer
This release contains forward-looking statements. Forward-looking
statements are statements that are not historical facts. In this release,
these statements concern the expected future business of Commerzbank,
efficiency gains and expected synergies, expected growth prospects and
other opportunities for an increase in value of Commerzbank as well as
expected future financial results, restructuring costs and other financial
developments and information. These forward-looking statements are based on
the management's current expectations, estimates and projections. They are
subject to a number of assumptions and involve known and unknown risks,
uncertainties and other factors that may cause actual results and
developments to differ materially from any future results and developments
expressed or implied by such forward-looking statements. Such factors
include the conditions in the financial markets in Germany, in Poland,
elsewhere in Europe and other regions from which Commerzbank derives a
substantial portion of its revenues and in which Commerzbank holds a
substantial portion of its assets, the development of asset prices and
market volatility, potential defaults of borrowers or trading
counterparties, the implementation of its strategic initiatives to improve
its business model, particularly to reduce its public finance portfolio in
Private Customers, the reliability of its risk management policies,
procedures and methods, risks arising as a result of regulatory change and
other risks. Forward-looking statements therefore speak only as of the date
they are made. Commerzbank has no obligation to periodically update or
release any revisions to the forward-looking statements contained in this
release to reflect events or circumstances after the date of this release.
Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com
End of UK-Regulatory news
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15.07.2013 DGAP's Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Commerzbank AG
Kaiserplatz
60311 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: ir@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE000CBK1001
WKN: CBK100
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt
(Prime Standard), Hamburg, Hannover, München,
Stuttgart; Terminbörse EUREX; London, SIX
Category Code: MSC
LSE Ticker: CZB
Sequence Number: 1522
Time of Receipt: Jul 15, 2013 11:56:10
End of News DGAP News-Service
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221193 15.07.2013
(END) Dow Jones Newswires
July 15, 2013 06:00 ET (10:00 GMT)
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