Things are progressing, slowly but steadily: the remains of the former scandalous bank Hypo Real Estate (HRE) are becoming smaller and smaller. Although “small” is relative in this case: the state-run settlement company FMS Wertmanagement recently managed securities with a volume of 44.4 billion euros from the HRE portfolio, as CEO Christoph Müller reported on Tuesday – five billion euros less than a year ago . Things should continue at this scale in the current year. And the FMS made a profit again. The dismantling of the contaminated sites brought in 96 million euros, leaving a net gain of 36 million euros. As in previous years, the money will flow into equity in order to further prepare the “bad bank” for possible risks in the future.
In autumn 2010, the FMS took over parts of the emergency nationalized HRE, and later the former subsidiary Depfa from Dublin was added. The company almost collapsed during the financial crisis and was supported with billions of euros in taxpayer money. In total, financing and securities with a nominal value of almost 190 billion came under state care for settlement. And this is likely to continue for a while: “We are preparing to continue managing the portfolio in the next few years,” said Müller. Immediate settlement would therefore be costly because the long terms of many securities – the last financing does not expire until 2078 – would result in additional losses of almost ten billion euros.
FMS sees the greatest risk for the future in two countries in particular – and their creditworthiness: Great Britain and Italy. Well over half of all claims and securities revolve around commitments there, often with the public sector as a counterparty. However, the danger that the current problems on the real estate market could once again plunge the remains of HRE into crisis has been averted. Practically all of the legacy issues in this area have already been eliminated, so the FMS is “not affected by the real estate crisis and the sometimes high depreciation,” said FMS board member Carola Falkner.