Commerzbank has reached agreements with investors on the sale of two commercial real estate (CRE) portfolios. Accordingly a European portfolio with a face value of €2.2 bln has been sold to a consortium comprising JP Morgan and Lone Star, and a German portfolio with a face value of approximately €0.7 bln to the investor Oaktree. The portfolios sold account for approximately 17% of the total of commercial real estate loans of €17.5 bln still held in the Non-Core Asset (NCA) segment as of the end of March 2015. Confidentiality was agreed on the further details of the agreements.
The German portfolio of commercial real estate loans sold primarily comprises non-performing loans. As a result of the sale the domestic CRE black book is being reduced by approximately 40%.
The European portfolio encompasses the countries Austria, Belgium, Czech Republic, Cyprus, Denmark, Finland, Hungary, Luxembourg, Netherlands, Rumania, Sweden, Switzerland, Slovakia and Turkey. The portfolio contains non-performing loans as well as other loans. The complexity in the NCA-CRE unit could be reduced considerably as a result of the sale.
The bank expects that the result in the second quarter of 2015 will see charges of approximately €65 mln and in the third quarter of €20 mln as a consequence of the sale. Due to the release of risk-weighted assets (RWA) of €1.9 bln the transactions lead to a positive net capital effect of approximately €105 mln. In total the sales have a positive impact on the core capital position of Commerzbank. In the future Commerzbank also intends to further reduce its portfolios in CRE and in ship finance in a value-preserving way. The Exposure at Default (EaD) of the CRE and ship finance units as of the end of March 2015 was €30 bln.
Accordingly, the risk profile of the CRE loans portfolio has improved considerably with the two most recent transactions. In addition, the volume of CRE non-performing loans is being reduced by approximately €1.3 bln as a result of the transactions (portfolio as of end of March 2015: €3 bln).