The wind-up of Irish DEPFA Group is making progress. DEPFA Group’s total assets decreased by 68% since 2014 and the Tier 1 capital (CET1) ratio rose to 109,2% as at the end of 2018.
When examining the possibility of acquiring the DEPFA Group, FMS-WM had already identified value levers that would result in a more favourable outlook for the wind-up of the DEPFA Group. These consisted of:
- cutting costs
- systematically leveraging the funding advantages
- buying back the liabilities issued by the DEPFA Group
The remaining volume of DEPFA liabilities with maturity dates from 2020 onwards still held by third-party investors amounts to only EUR 0.4 billion. The DEPFA Group has gradually limited the expense of having its liabilities rated to the bare minimum, thereby further reducing the tradability of DEPFA liabilities. Although the liquidity of the debt instruments is now very low, FMS-WM does not expect a significant volume of further repurchases to be a possibility and will therefore cease buying up DEPFA liabilities in June 2019 as announced.
The measures planned for 2019 are intended to further reduce total assets of the DEPFA Group, simplify the organisational structure and transfer or distribute capital to FMS-WM bearing in mind regulatory minimums. The measures are designed to fully utilise the value levers identified and ensure maximum flexibility with regard to the further wind-up strategy. In light of the still-positive market environment, FMS-WM is examining the possibility of selling the DEPFA Group. In this context, the potential proceeds from selling the DEPFA Group are being compared against the benefits to be gained from FMS-WM continuing the accelerated wind-up of the DEPFA Group.
Given the progress achieved in fiscal year 2018 and irrespective of the further wind-up strategy, FMS-WM continues to assume that winding up the DEPFA Group remains the favourable option compared with the sale that was not carried out in 2014.
Further information on DEPFA Bank plc is available on the website: http://www.depfa.com/