FMS Wertmanagement finishes first half of 2012 with EUR 50 million loss
FMS Wertmanagement, the Federal government's winding-up institution tasked with winding up the risk positions and non-strategic operations of the HRE Group, today announced that it finished the first half of 2012 with a loss of EUR 50 million. "After the inevitable write-downs of our Greece portfolio, which caused losses in the billions in our 2011 annual financial statements, the first half of 2012 was significantly calmer," according to Executive Board spokesman Dr. Christian Bluhm. "This moderately negative result from ordinary activities of EUR 50 million is acceptable in view of the size and complexity of the portfolio. Our favourable funding conditions allow us to hold positions to maturity or until their value increases, and therefore to limit losses as much as possible."
In aggregate, EUR 30.5 billion of the portfolio has been wound up since the takeover of the portfolio effective 1 October 2010. However, factoring in countervailing currency effects reduces this figure by EUR 6.2 billion. The nominal value of the portfolio therefore amounted to EUR 151.4 billion at the end of the first half-year 2012 compared with EUR 175.7 billion at the transfer date.
FMS Wertmanagement's total assets declined by 13.6% since the beginning of the year to EUR 295.3 billion. The primary reason for the sharp drop in total assets is a substantial reduction of own issues bought back that served as collateral for funding transactions. This balance sheet item decreased from EUR 129.2 billion at the start of the year to EUR 94 billion at the end of the half-year.
A particularly positive change was seen in net interest income, which at EUR 382 million at the end of the half-year already totalled 69% of the figure for the previous year as a whole. This was mainly the result of the further improved funding structure and funding costs due to extensive own issues by FMS Wertmanagement. Net commission income was EUR 25 million. In contrast, general and administrative expenses amounted to EUR 183 million, a figure that includes payments of EUR 140 million to pbb based on the existing cooperation agreement.
"The total of net interest income, commission and other operating income exceeds general and administrative expenses considerably. This indicates that the portfolio more than covers the expenses required for administration, leaving aside write-downs, which are unfortunately unavoidable in a wind-up portfolio with problem loans," says Executive Board spokesman Bluhm.
In the first half of 2012, the net expense for risk provisions and the net result from investments totalled EUR 280 million. This figure includes losses from the unwinding of derivatives and additions to the provision for expected losses from derivatives in addition to the net revaluation loss for loans and securities.
FMS Wertmanagement was able to continue successful capital market activities aimed at optimising the funding structure. In the first half-year, issues totalling EUR 19.7 billion were placed and included three benchmark bonds. The planned placement volume of EUR 25 billion for 2012 as a whole was exceeded as early as July. As an institution of the Federal government, FMS Wertmanagement's activities are underpinned by top ratings from all leading rating agencies.
For 2012 as a whole, Executive Board spokesman Bluhm continues to anticipate a result significantly improved over 2011, "with the result materially influenced by the course of the sovereign debt crisis."
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