Bawag to Buy Depfa Bank From Germany a Decade After Collapse

Austrian lender Bawag Group AG agreed to buy Depfa Bank Plc, adding a business with low credit risk and a relatively safe run-off portfolio after Germany scaled back its balance sheet since nationalizing it during the financial crisis.

The Vienna-based lender will continue the orderly wind-down of Depfa, which is being sold by FMS Wertmanagement, Germany’s state-owned bad bank, according to a statement Monday. Depfa is the former Irish unit of Hypo Real Estate Holding AG and up until 2009 was focused on issuing public sector covered bonds.

The purchase price wasn’t disclosed in the statement. Bawag is paying more than 320 million euros ($388 million) for Depfa, a person familiar with the matter said, asking not to be identified because the information is private. That’s more than FMS would have received when it tried to sell Depfa for the first time in 2014.

Officials for Bawag and FMS declined to comment on the price tag.

“The acquisition of Depfa represents an attractive and capital accretive investment opportunity,” said Bawag Chief Executive Officer Anas Abuzaakouk. “This allows us to acquire high-quality low-risk assets, leverage our balance sheet, and draw upon on our existing infrastructure and operational capabilities.”

Bloomberg reported last week that Bawag was emerging as the frontrunner to acquire Depfa, which couldn’t secure short-term funding in the financial crisis, forcing Hypo Real Estate into a taxpayer-funded bailout. Germany decided in 2014 to abandon an effort to sell Depfa and instead wind down the business. The state then transferred its stake to FMS.

Depfa had 6.9 billion euros of total assets at the end of June last year ($8.4 billion), down from 8.9 billion euros at the end of 2019, according to its its interim report.

Bawag is Austria’s third-largest listed lender by market value and was previously owned by private equity firm Cerberus. It has been looking for suitable takeover targets following its initial public offering three years ago. It had 360 million euros excess capital for deals, its said last week.

Barclays Plc advised FMS on the transaction.

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