Fiscal Year 2016
Another year in the black for EAA
- EAA continues to focus on winding-up its participation portfolio
- In total, approx. 80% of the acquired loans, securities and derivatives have been settled
- Management costs are reduced by 29% compared to previous year
Düsseldorf, 16 March 2017. The EAA generated a surplus of around EUR 10 million in the past fiscal year. This was due to a number of long-standing and successfully completed measures in the EAA portfolio: Restructuring measures as well as sales and closures of investments ultimately led to a positive result from financial assets and participations. In particular, the EAA benefited from indemnity-payments from a major bank in the United States. These were based on a settlement that resolved a case brought by the EAA pertaining to losses from structured credit transactions. The continued reduction in the general management costs, which were down by 29% compared to the previous year, also contributed to the positive overall result.
“The EAA concluded its fifth year in a row in the black. This is not a matter of course, as the earnings base decreases the closer the winding-up of the portfolio nears completion,” explained Matthias Wargers, Spokesman of the Managing Board. In the past fiscal year, the EAA reduced the nominal value of the transferred loans and securities by 6.3 to EUR 29.7 billion. This means over 80% of the loans and securities holdings that were transferred to the EAA from the former WestLB in 2009/2010 have been settled. In 2016, the nominal value of the trading portfolio acquired in 2012 dropped by 83.1 to EUR 258.6 billion. In total, roughly 76% of this portfolio acquired in 2012 has thus been settled.
Cautious optimism for the continuing winding-up process
“The overall winding-up process was not only faster than originally planned but also preserved more value than expected,” said Wargers. At the end of the past fiscal year, the EAA still had a stable buffer, made up of equity, equity capital drawing rights and risk provisions, of more than EUR 2 billion in order to absorb potential losses in the winding-up process. “We have not had to made use of the liability commitments from our public stakeholders and we are confident that it will stay that way,” commented Wargers.
The EAA Management Board also points out that the EAA continues to deal with difficult restructuring measures with the portfolio of the former WestLB. This concerns power plant projects in southern Europe, whose risks have increased largely due to the development of the energy markets, or a portfolio with life insurance policies in the United States, which recently deteriorated due to unilateral action on the part of the contracting partners.
After the successful results in its winding-up activities in the past fiscal year, the EAA will evaluate in the current year how it can continue to optimise and even accelerate the winding-up process.