Resolution passed to transfer assets to FMS Wertmanagement on 30 September 2010
The Steering Committee (Lenkungsausschuss) of the Financial Market Stabilisation Fund (Finanzmarktstabilisierungfonds (SoFFin)) decided in its meeting on 22 September 2010 the split-off (Abspaltung) of substantial risk assets and non-strategic business lines from the Hypo Real Estate Group (HRE) to FMS Wertmanagement with effect as of the cut-off date 30 September 2010. The portfolio to be transferred includes loans, securities and derivatives and has an expected accounting value of Euro 191.1 billion.
The task of FMS Wertmanagement will be the value preserving liquidation of the transferred risk positions and non-strategic business lines. In the course of this process, all bonds guaranteed by the SoFFin will be completely transferred to FMS Wertmanagement, gradually phased out at the latest by the middle of next year and replaced by respective issuances of FMS Wertmanagement.
Part of the transfer process and of the decision of the Steering Committee is also a further capitalisation of HRE. For this purpose, HRE will receive Euro 450 Million, the granting of which was already approved in the meeting of the Steering Committee on 29 April 2010 (see also Press Release of HRE of 30 April 2010), which shall be available for pbb Deutsche Pfandbriefbank. An additional amount of Euro 2.08 billion shall be forwarded by HRE to FMS Wertmanagement. Together with a further advance of capital to FMS Wertmanagement from HRE in the amount of up to Euro 1.79 billion, FMS Wertmanagement will eventually be equipped with equity of up to Euro 3.87 billion. Overall, the funds provided by the SoFFin to HRE will then amount to Euro 9.95 billion.
The equity provided to FMS Wertmanagement shall cover expected losses from the liquidation of the transferred portfolio. According to the principle of responsibility of the shareholder, there is an obligation on the SoFFin pursuant to § 8a German Financial Market Stabilisation Fond Act (Finanzmarktstabilisierungsfondsgesetz) to inject further funds to cover further future unexpected losses.
"The transfer to FMS Wertmanagement constitutes an important pre-requisite for the further stabilisation and the successful restructuring of HRE. The transaction allows for a value preserving liquidation of the transferred assets and, as a consequence, permits Deutsche Pfandbriefbank to focus on a future-oriented business model." said Dr. Hannes Rehm, speaker of the Management Committee (Leitungsausschuss) of the Federal Agency for Financial Market Stabilisation (Bundesanstalt für Finanzmarktstabilisierung).
The entire measure is subject to state aid clearance by the EU-Commission.
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The Financial Market Stabilisation Agency (FMSA) manages the Financial Market Stabilisation Fund (SoFFin). It has been given the name "Financial Market Stabilisation Fund" as per its objective and because of the limited period of time it will be in operation. The fund was created on 17 October 2008 under the German Financial Market Stabilisation Act.
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