Winding-up institution generates profit from ordinary activities of EUR 413 million
Remaining portfolio reduced by 10.9 percent to EUR 94.7 billion; total assets lowered by 6.8 percent to EUR 171.1 billion
Preconditions for accelerated wind-up of DEPFA Group in Ireland created
FMS Wertmanagement (FMS-WM) today announced that it concluded fiscal year 2015 with a profit from ordinary activities of EUR 413 million (previous year: EUR 373 million). The German federal government’s winding-up institution had been established in July 2010 to take over risk positions and operations of the HRE Group.
“We are making good progress with the task of winding up our portfolio. The continued stability of the economic environment and the low interest rates in the financial markets helped us advance the unwinding of the portfolio and achieve a positive result for the fourth year in succession,” said Stephan Winkelmeier, Spokesman of the Executive Board.
The nominal value of the remaining portfolio was reduced by 10.9 percent in 2015, from EUR 106.3 billion to EUR 94.7 billion. Factoring in countervailing currency effects, the portfolio contracted by EUR 15.5 billion in 2015. Since taking over the portfolio in 2010, FMS-WM has reduced its original nominal value of EUR 175.7 billion by EUR 81.0 billion in total, or 46.1 percent.
Total assets decreased by EUR 12.5 billion or 6.8% to EUR 171.1 billion in 2015.
At EUR 540 million, net interest income was slightly higher than in the previous year (EUR 526 million) in spite of the continued wind-up of the portfolio. This was attributable to the persistently favourable funding conditions on the money and capital markets, but also to effects in connection with derivatives.
In fiscal year 2015, net income from risk provisions (including net income from investments) was EUR 35 million (previous year: EUR 32 million). This was mainly due to reversals of specific loan loss provisions and to realized profit from disposals.
Net commission income in the amount of EUR 64 million was up 14.3 percent on the prior-year figure (EUR 56 million), due in particular to effects in connection with credit derivatives.
General and administrative expenses were lowered by 14.3% to EUR 210 million in 2015 (previous year: EUR 245 million). This decline is primarily due to substantially lower legal and consulting costs.
FMS-WM has a direct guarantee from the German Financial Market Stabilisation Fund and an AAA rating from the three largest rating agencies. In 2015, FMS-WM took advantage of the low interest rates on the money and capital markets to obtain money market funds of EUR 12.3 billion. The yield spread to issuers with a comparable risk profile was reduced further.
As a result of the sale process for FMS Wertmanagement Service GmbH that was terminated in spring 2015 and the transfer of the DEPFA Group to FMS-WM at the end of 2014, the wind-up task has been expanded to include these two units. “After implementing extensive measures in 2015, we will continue to leverage all potential synergies available to us to achieve the best possible wind-up result in the interests of the German taxpayer,” Executive Board Spokesman Winkelmeier commented. “Particularly by acquiring hybrid capital and through DEPFA’s Pfandbrief issues, topping EUR 6 billion to date, we have created important preconditions for an accelerated wind-up of DEPFA Group.”
In 2016, FMS-WM plans to wind up another approximately EUR 7 billion of the portfolio. Given the stable economic environment, the Executive Board of FMS-WM expects that the bank will at least break even in the current year as well.
FMS-WM 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-WM 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.