Friday 19th November 2021
Former HRE subsidiary on the edge
The federal government sells Depfa to Austria
As a subsidiary of HRE, Depfa-Bank sent parts of the financial system to the brink. Only the massive entry of the state prevented the collapse. Almost a decade and a half later, a line can be drawn under part of the chapter – with good news for taxpayers.
A decade ago, the Dublin-based Depfa Bank tore its parent company Hypo Real Estate (HRE) into the abyss – now the federally owned HRE development agency FMS has completed the sale of Depfa to the Viennese banking group Bawag. The parties have agreed not to disclose the sales price. But the total income from the settlement exceeded the previous purchase price several times over, announced the FMS in Munich.
The decision to wind up Depfa under the leadership of FMS “has proven to be correct and very successful,” said FMS CEO Christoph Müller. Their own expectations have been clearly exceeded. “With the sale of the Depfa Group, FMS Wertmanagement is taking another important step in dealing with the consequences of the financial crisis,” said Finance State Secretary Jörg Kukies.
HRE bought Dublin-based Depfa shortly before the 2007 international financial crisis. Depfa specialized in public bonds and the financing of public projects. Some of these papers have a maturity of decades. Depfa refinanced these cross-country skiers with short-term loans. When bank lending came to a standstill in the financial crisis of 2008, Depfa ran out of money – and with it mother HRE.
The federal government nationalized the HRE in 2009 and founded the FMS to handle the HRE business and risk positions. In the meantime, FMS has reduced more than two thirds of the original HRE portfolio of 175 billion euros.
The HRE successor pbb had already tried to sell Depfa in 2013. But the federal government decided at the time to instead give it to its own “bad bank” FMS-WM for 323 million euros. This brought out a total of 377 million euros in special prizes from the settlement in 2018 and 2019 alone.