The wind-up of Irish DEPFA Group is making progress. DEPFA Group’s total assets decreased by 62% since 2014 and the Tier 1capital (CET1) ratio rose to 78.9% as at the end of 2017.

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

Within three years, total assets fell from EUR 48.5 billion as at the end of 2014 to EUR 18.6 billion as at the end of 2017, a decrease of 62%. The DEPFA Group’s total wind-up portfolio decreased from EUR 23.8 billion to EUR 8.7 billion. Its risk-weighted assets declined by 78% in the same period, from EUR 5.4 billion to EUR 1.2 billion. In combination with a considerable improvement in its results of operations, this led to a rise in the DEPFA Group’s Tier 1 capital (CET1) ratio from 15.5% in 2014 to a well-above-average 78.9% as at the end of 2017. For 2017, the DEPFA Group posted a pre- tax profit of EUR 93 million.

The buy-back transactions significantly reduced the outstanding nominal amounts of DEPFA liabilities. The amount of assets required as collateral for outstanding Pfandbrief securities at DEPFA ACS BANK in Dublin and DEPFA Pfandbriefbank International in Luxembourg was reduced to EUR 3.0 billion and EUR 0.1 billion respectively.

The very positive track record of the DEPFA Group’s wind-up thus far opens up options for the further course of action over the medium term that go beyond the continuation of the successful wind-up of the DEPFA Group:

  • Reducing capital: The well-above-average level of capital achieved by consistently implementing the value levers for the DEPFA Group’s wind-up can now be gradually reduced while observing regulatory minimums.
  • Examining the possibility of a sale: Due to the progress made on the wind-up of the DEPFA Group and in light of the still-positive market environment, FMS-WM is examining the possibility of selling the DEPFA Group or parts of the banking group.

Given the progress achieved in fiscal year 2017, FMS-WM continues to assume that winding-up the DEPFA Group remains favourable compared to a sale of the DEPFA Group that was not carried out in 2014.

20180604 DEPFA Assets CR

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