Pbb Deutsche Pfandbriefbank boosts new lending, prepares privatisation

Pbb Deutsche Pfandbriefbank, the ‘good bank’ that survived from the ruins of the old Hypo Real Estate, managed to boost its pre-tax profits for the full year 2013 to €165m, an increase of 30% on the previous year, in part due to the once-off effect of the sale of a major property asset. Like other peer banks, Deutsche Pfandbriefbank saw a big jump in its new property lending, by nearly 50% to €8.2bn, all bar 15% of it genuine new business, with the bank promising a further hefty increase in lending for 2014.

The nationalised bank is under orders from Berlin to privatise itself by 2015. The bank now has a balance sheet of €74bn, down by nearly a quarter on the year before, of which about €33bn is in public sector finance. Board member Bernhard Scholz said to a group of journalists at the recent MIPIM in Cannes that the bank now had funding in line with the bank’s lending book, meaning that for any potential buyer there is no funding gap that would have to be made up from external resources. “This makes us highly attractive to potential investors”, he said.

During 2013 the bank refinanced itself with new long-term funding of €7.7bn, of which €4.5bn were issues of Pfandbriefe with an average maturity of 6.9 years, while another €3.2bn was unsecured funding with an average maturity of 5.2 years. Interestingly, pbb direct, the bank’s internet banking arm which was only established in March 2013 as a means of diversifying the bank’s funding structure, had managed to secure overnight and term deposits of more than €1bn from private investors.

The makeup of the bank’s property book is now €12bn exposure to Germany (or 54%), €3.5bn to the UK, €2.1bn to central and eastern Europe, €1,8bn to France and €1.4bn to Scandinavian countries.

Meanwhile, the bidding for Depfa Bank, the Dublin-based subsidiary of the old Hypo Real Estate Holding, has moved on to the next round, after bids from interested buyers were submitted by the end of January. The public finance bank has to be sold by end-2014 to comply with an EU diktat, a deadline which Hypo Real Estate said in a recent statement might even by met by the end of June.

A Bloomberg report this week said that private equity groups Blackstone and Apollo Global Management LP had withdrawn from the bidding. Among those still interested are JC Flowers & Co with hedge fund Third Point LLC, the New York hedge fund Mead Park Holdings, and a consortium headed by ex-UBS and Credit Suisse boss Oswald Grübel. By end-January, Hypo Real Estate had received bids for between €250m and €350m for the stricken Depfa, which had €54bn in assets at the latest count.