Austrian lender Bawag becomes leader in Dublin-based takeover of Depfa

Austrian lender Bawag Group is emerging as the leader to acquire Depfa Bank, the public sector financier sold by Germany, people familiar with the matter said.

FMS Wertmanagement, the bad state bank that controls Dublin-based Depfa, is negotiating the terms of a deal with Bawag, the sources say. No final deal has been reached, and another winner could yet emerge, the people said, asking not to be identified as the information is private.

Kommunalkredit Austria and German regional lender LBBW had previously researched the business, the people said. Representatives for FMS, Bawag, Kommunalkredit and LBBW declined to comment.

Depfa is the former Irish unit of Hypo Real Estate Holding, which acquired the company in 2007 for more than 5 billion euros. When the financial crisis hit, Depfa was unable to secure short-term funding, forcing Hypo into a taxpayer-funded bailout.

Banks became more cautious about lending after the quality of their assets was hit by the coronavirus pandemic. Vienna-based Bawag’s lawsuit of Depfa would provide it with a bad credit loans risk lender and a safe liquidation portfolio after FMS spent years reducing its balance sheet. The transaction could prove lucrative for Bawag, which would have access to excess capital held by Depfa.

Total assets

Depfa had € 6.9 billion in total assets at the end of June last year, up from € 8.9 billion at the end of 2019, according to its interim report. Its Tier 1 capital ratio was approximately 153% as of June 30.

Germany decided in 2014 to abandon its efforts to sell Depfa, deciding instead to shut down the company. The state then transferred its stake in Depfa to FMS.

Bawag is Austria’s third-largest listed lender in terms of market value. It was previously owned by private equity firm Cerberus, which sold the last of its stake in 2019. The bank this week posted better-than-expected fourth quarter results and announced plans to pay 460 million euros of dividends this year, pending ECB approval. – Bloomberg

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