Aareal Hyp, the wholly-owned mortgage bank subsidiary of Aareal Bank AG, has been merged into its parent company. As a result of this merger, which became effective upon registration with the Commercial Register, Aareal Hyp has ceased business activities, and will be integrated both legally and organisationally into Aareal Bank. Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank, emphasised that the bank had achieved another major milestone in its strategic realignment: By integrating our mortgage bank subsidiary, we have reduced the complexity of the Aareal Bank Group. Furthermore, we are now in a position to directly exploit the benefits of issuing mortgage covered bonds.
Following the integration of Aareal Hyp, and by virtue of a license held by Aareal Bank, the bank is now in a position to issue its own Pfandbriefe and hence, to benefit from the associated funding advantages. As a Jumbo Pfandbrief issuer, we are broadening our capital market presence to reach an international scale, whilst expanding our investor base, Schumacher added. Aareal Bank envisages placing Jumbo issues on a regular basis, with a view towards raising the share of covered mortgage bonds in Aareal Bank Groups funding mix, from currently around 10% to a level between 40% and 60% in the medium term.
Schumacher further explained that Aareal Bank seeks to leverage Jumbo Pfandbriefe, as a well-established international capital market segment, to expand its placement power beyond Germany. Aareal Banks mortgage bank subsidiary had already launched its first Jumbo Pfandbrief issue at the end of January 2006. Having gained a top triple-A rating from Fitch Ratings, the 1 billion bond with a five-year benchmark maturity was three times oversubscribed within a very short period of time. Schumacher added that broadening the international diversification of the banks liability side in line with the structure of its lending business will strengthen Aareal Banks capital market presence by expanding its investor base, whilst reinforcing the banks image as a reliable, fair and competent issuer".
Source: Aareal Bank