Competence and endurance – winding up the equity investment portfolio

An entire raft of restructuring measures is necessary, in particular for winding up the EAA‘s operating equity investments. Transactions such as the privatisation of WestImmo, which was concluded in 2015, require long-term planning. The first measures after the takeover in 2012 succeeded in restoring the bank’s profitability. Supported by its management, the next step was to focus WestImmo on its business as a Pfandbrief bank. SPBM identified exposures in the portfolio that hampered a realignment of the bank and negotiations with investors and transferred these to the EAA.

Long before the experts in the EAA‘s Participation Management team started the selling process, they thoroughly sounded out the market and conducted numerous discussions to develop a sustainable strategy and achieve an optimal result for the wind-up plan. During the period from the takeover to the sale, capital repayments and income in the amount of EUR 800 million were generated for the EAA.

The EAA Participation Management team is working on further sales with vision and endurance. An example of this is the EAA Covered Bond Bank. The specialist bank for Irish asset covered securities – which are comparable to the German Pfandbriefe – initially required extensive stabilisation as a consequence of the financial crisis. Once that was achieved, the EAA focused on priming EAA Covered Bond Bank for an eventual sale. Securities totalling EUR 4.5 billion were transferred to the EAA in 2015, among other things, in order to reduce the subsidiary‘s balance sheet. The offer for sale was announced to the international market in March 2016.

The takeover of such sub-portfolios does not change the risks to which the EAA is exposed. All of the subsidiaries‘ positions are taken into account in the EAA‘s wind-up plan. Transfers from the subsidiaries to the EAA as the parent company therefore change neither the wind-up result of a fiscal year nor the risk situation. Such steps are designed solely to optimise the wind-up process. The EAA succeeded by the end of 2015 in reducing the number of equity investments from more than 300 direct and indirect exposures to around 130. By the end of the previous year, 835 of what had been 1360 special purpose vehicles (for example for structured financing solutions, leasing or real estate transactions) were closed.