The German federal government’s winding-up institution FMS Wertmanagement is ending the privatisation process for selling its wholly owned subsidiary, FMS Wertmanagement Service GmbH (FMS-SG). On 1 May, the remaining exclusive consortium in the process notified FMS Wertmanagement in writing that it would no longer be pursuing the acquisition of FMS-SG.
"Of course we are disappointed about this outcome because our goal was to privatise FMS-SG," said Executive Board Spokesman Dr. Christian Bluhm, "but in a number of points which we consider especially important, relating in particular to liability issues, letters of comfort and termination options, we were simply not on the same page."
In the last scheduled round of negotiations with the consortium, discussion had centred on questions regarding the future liability of FMS-SG and possibilities for the legal protection of FMS-SG by the potential buyer.
"It is most unfortunate that the process has ended, but FMS Wertmanagement has a duty to protect the taxpayer's interests," said Frank Hellwig, Member of the Executive Board of FMS Wertmanagement and Chairman of the Supervisory Board of FMS-SG. "Operating stability and profitability were always FMS Wertmanagement's top priorities in this process."
FMS Wertmanagement had announced in April 2014 that it was selling FMS-SG in a pan-European tender process. FMS-SG performs a large part of FMS Wertmanagement's portfolio management activities and has extensive know-how in unwinding wind-up portfolios in a multitude of asset classes in a manner that maximises their value.
FMS-SG will continue to provide FMS Wertmanagement with all services needed for successful unwinding of the portfolio in the customary high quality.
At no time were FMS Wertmanagement and its owner forced or required to privatise FMS-SG. In the medium term, FMS Wertmanagement will develop and examine possible strategic alternatives for FMS-SG in detail in close cooperation with its corporate bodies.
FMS Wertmanagement was founded in 2010 with the aim of winding up the risk positions and operations that were transferred to the company from the Hypo Real Estate Group (HRE Group) effective 1 October 2010. As a financially independent entity under public law, FMS Wertmanagement defines the best possible wind-up strategies in each case and implements them based on the following maxim: seize opportunities for generating income and minimise losses. FMS Wertmanagement is supervised by the Federal Agency for Financial Market Stabilisation (FMSA). The Financial Market Stabilisation Fund SoFFin is obligated without limitation to provide additional funds under Section 8a of the German Law Establishing a Financial Market Stabilisation Fund (Gesetz zur Errichtung eines Finanzmarktstabilisierungsfonds - FMStFG) for losses incurred in winding up the portfolio.