DEPFA has gone from strength to strength since it split from the Aareal mortgage bank and moved to Dublin. Jan Wagner reports from Frankfurt and Dublin on the most profitable bank active in Germany today. Germany’s mortgage banks have been partying recently. In May, Eurohypo held a bash to celebrate the 10th anniversary of the “Jumbo Pfandbrief”. Since its introduction, the high-volume Jumbo has spawned a €600bn European market.As the market leader, Eurohypo and its peers whooped it up. Attractions included plenty of champagne and an elephant installed in front of the Frankfurt stock exchange. Another Pfandbrief conference, replete with champagne, was hosted in June.
This year is the 10th anniversary of the jumbo pfandbrief. Famous for its security, its past is more chequered than you would imagine. Edward Russell-Walling talks to Dresdner Kleinwort Wasserstein, which has been a top three player since the market started.
Deutsche Bank’s successful euro issuance for Brazil helped the dollar market to rally, setting the stage for it to do subsequent dollar and euro deals for a diverse range of issuers. Sophie Roell reports.The Greeks may have won Euro 2004 but the Germans are firmly in the lead when it comes to euro issuance out of Latin America.
Germany’s medium-sized companies’ political clout has led to banks coming up with innovative capital-raising solutions for them, says Brian Caplen. Refusing to lend to the Mittelstand in Germany is the fastest route to bad publicity and political outcry. These small and medium-sized enterprises account for three quarters of output in Germany, higher than in most other western European economies where large firms dominate. What’s more, they have a large political voice.The fact remains, however, that lending to the Mittelstand at low margins does not make economic sense for banks, even if it makes good politics.
A US fund is leading the way in dealing with Germany’s bad loan overload. Brian Caplen reports. The great potential of German distressed debt may not be obvious to all but it is proving attractive to Lone Star, the US private equity fund that has purchased two-thirds of all the non-performing loans (NPLs) sold by German banks.Yet with an estimated €300bn of bad loans in the German banking system and so far only €10bn sold, there is no danger of supplies evaporating.
Most commentators are not expecting radical change to result from either of the two key pieces of banking legislation due this year. The planned abolition in July of the state guarantees currently afforded to the Landesbanken – institutional liability (Änstaltslast) and guarantor liability (Gewährträgerhaftung) – is unlikely to bring about major restructuring.
A lot of the groundwork for a German revival is complete. The news remains bad but then the darkest hour is often just before the dawn. Brian Caplen reports.While the headline news about Germany’s economy remains dire and political battles continue to be fought over reforms and job losses, behind the scenes Europe’s largest economy is showing signs of restoration to at least some of its former glory.
board member, Commerzbank If ever someone was destined to become chief executive of one of Germany’s top banks, arguably it would be Martin Blessing, board member at Commerzbank.His grandfather Karl was president of the legendary Bundesbank between 1958 and 1969, and his father Werner was a board member at Deutsche Bank.
In 2004, Germany saw its first ‘true sale’ securitisation, the birth of a non-performing loan market and the founding of a new exchange, reports Jan Wagner.Last year was another difficult one for German banks. Contrary to expectations, equity markets did not perform particularly well and neither did the economy. Despite this, German banks will probably regard 2004 as one of their better years as the financial industry matured greatly, thanks to several important innovations. As 2004 began, Germany’s hedge fund industry was born when the direct sale and domiciling of these products in the country was permitted for the first time.
Merger and acquisition activity in the German banking industry is picking up, after nearly four years of standstill. As 2004 ended, two major acquisitions were announced in private banking and wealth management – a business that generates plenty of money for banks in Germany.
Germany’s small and medium-sized enterprises are turning to structured finance products to provide the credit they sometimes struggle to find, says Jan F Wagner. German bankers may not like to admit it, but for the first time in post-war German history, the country’s small and medium-sized enterprises (SMEs), known collectively as the Mittelstand, face a credit crunch.According to a new survey by KfW, the government-owned development bank, nearly half the Mittelstand say that obtaining a bank loan – its main means of finance – has become “considerably more difficult”. KfW also found that three-quarters of the SMEs turned down for a loan would have paid a higher interest rate to get it.