Wednesday, April 02 15:49:38
State-rescued German bank Hypo Real Estate has attracted three final bids for its Dublin-based public finance unit Depfa Bank and is likely to pick a buyer within the next couple of weeks, sources familiar with the process told Reuters.
A bidder group led by hedge fund Third Point and a consortium including hedge fund Mead Park and former UBS Chief Executive Oswald Gruebel are among the final contenders, as is an unnamed U.S.-based investor, they said.
The offers value Depfa at 200-300 million euros ($276-$414 million) and Hypo Real Estate will pick a buyer in late April or early May, they added.
Hypo Real Estate has to sell Depfa by the end of 2014 and its Deutsche Pfandbriefbank AG arm by 2015 as a condition for the European Commission's approval of its state bailout.
In a presentation that Hypo Real Estate prepared for the German government and that was seen by Reuters, it said that it sees greater returns from a sale of Depfa than from winding down the public finance specialist, despite a recent deterioration of its profitability.
Depfa posted a pretax loss of 20 million euros in 2013 but had a net profit of 36 million. Its balance sheet total decreased to 49 billion from 73 billion, while its core tier 1 capital ratio under Basel III rules in their most stringent form increased to 19.8 percent.
HRE itself saw its 2013 pretax profit decline to 109 million from 182 million euros in 2012, while its core tier 1 capital ratio decreased to 14 percent, according to the presentation.
Germany will not provide any guarantees to shield Depfa's large public finance portfolio to the bidders, according to the presentation.
The government has received 485 millions euros more in fees and redemptions from Depfa than it spent on the 1.2 billion bailout, the document also showed.
Germany nationalised Hypo Real Estate after it collapsed in the aftermath of the Lehman Brothers bankruptcy and gave a 10 billion euro capital injection as well as 145 billion euros in liquidity guarantees to the stricken lender.
Hypo Real Estate, Third Point and Gruebel declined to comment, while Mead Park was not immediately available for comment.