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Depfa Bank to be sold at 6pc of its 2007 valuation


Swiss bank UBS CEO Oswald Gruebel

Swiss bank UBS CEO Oswald Gruebel

Swiss bank UBS CEO Oswald Gruebel

FORMER Dublin-based banking giant Depfa is set to be sold at around 6pc of its 2007 valuation.

German bank Hypo Real Estate has attracted bids of between €200m and €350m for its IFSC-based Depfa Bank unit, according to news agency Bloomberg.

Even at the higher end of the valuations, it is a fraction of the €5.7bn that Hypo paid to buy the specialist lender seven years ago.

The offers to buy the business are from US private equity firms JC Flowers & Co, Apollo Global Management, a consortium led by Third Point, and jointly from Blackstone Group and Och-Ziff Capital Management.

Senior Swiss banker Oswald Gruebel, former CEO of UBS and Credit Suisse Group, is reported to be involved in one of the bids alongside a Middle East sovereign-wealth fund.

Depfa was put up for sale as a condition of European Union approval for a €10bn bailout of its parent Hypo back in 2011.

First-round offers for Depfa were received late last year, with second-round bids made ahead of a January 28 deadline.

A final round of bids and selection of a referred bidder could happen within weeks.

Once Ireland's biggest bank in terms of its balance sheet, Depfa employs around 225 people at its headquarters in the IFSC in Dublin.

It was bought by Hypo Real Estate, just a year before Depfa was threatened with collapse when its access to bank liquidity was threatened as a result of the global financial crisis. The threatened collapse ultimately cost German taxpayers €10bn in rescue loans and €145bn in guarantees.

Depfa is a century-old German lender that famously became the biggest Irish bank after moving here in the 1990s. The relocation to Ireland was seen as a major coup for the IFSC at the time.

The lucky timing of its sale just ahead of the banking crisis meant there was no question of Irish taxpayers having to save the bank.

Depfa's main business was making long-term loans to local governments around the world; since the crash the bank has managed a portfolio of about €51bn of loans but has not underwritten new business since 2009. (Additional reporting Bloomberg)

Irish Independent