Commerzbank Unloads Bad Spanish Property Loans

Commerzbank Unloads Bad Spanish Property Loans

Commercial News » Europe Commercial News Edition | By WPJ Staff | February 6, 2014 9:30 AM ET

Commerzbank has sold €710 million ($961 million) worth of bad Spanish property loans, as the bank continues to work on improving its risk profile. 

In a company announcement today, Germany's second-biggest lender said it sold the non-performing loans to international investors. 

"We are pleased that through these transactions it has been possible to reduce non-performing commercial real estate commitments in a difficult market in a value preserving way," Sascha Klaus, divisional board member Non-Core Assets Commercial Real Estate, said in a statement. "We will consistently continue to fulfill our asset reduction assignment and focus on transactions that meet our stringent requirements, arising from present market opportunities."

With this transaction, Commerzbank has reduced its risk-weighted assets by €600 million, creating a positive net capital relief effect of approximately €20 million, the bank stated. 

The sale is the latest move by the bank to restructure after receiving €18 billion in a government rescue during the financial crisis. 

In 2012 it decided to reduce its mortgage unit Hypothekenbank Frankfurt International, previously known as Eurohypo. Since the beginning of 2013, the bank has halved the volume of non-performing loans in its Spanish commercial real estate portfolio from about €2 billion to about €1 billion, benefiting from a pickup in the Spanish real estate market, the bank said.

The bank has been working on selling large portfolios to improve its risk profile ahead of a review from European bank regulators. 

In July 2013, Commerzbank sold a U.K. commercial real estate loans portfolio worth €5 billion ($6.5 billion) to Wells Fargo & Co. and Lone Star Funds. 

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