GERMANY – BNP Paribas Securities Services has acquired Commerzbank's German Depotbank business for an undisclosed sum, taking on €13bn of open-ended real estate funds (GOEF) as part of the transaction.
The Depotbank's €93bn in assets under depositary consist of German-domiciled UCITS funds and institutional vehicles, with Gerald Noltsch, head of BNP Paribas's German office, praising the diversifying effect of the deal, which sees the French company enter the GOEF market and expand its mutual fund presence.
Noltsch told IP Real Estate: "With €13bn in open-ended real estate fund assets in the Depotbank, we will become the third largest real estate Depotbank in the German market for retail funds as well as for institutional funds.
"We will, in addition, be able to increase our market dominance in the institutional securities funds area and gain a significant presence in the UCITS business – an area that, to date, has been under development and, in the case of real estate, non-existent.
"Both will be strengthened by the acquisition. The retail funds in liquidation are not part of the transaction."
The company's interest in the GOEF market comes despite its well-documented problems, with a number of funds frozen or forced to liquidate – to the point where DYZ warned that asset sales could destabilise the Dutch market.
Large asset managers such as Union Investment have nonetheless continue to support the market, with one of Union's vehicles recently buying buildings in Frankfurt and Darmstadt.
"The retail real estate funds need to be wound down now, as they were clearly abused in some cases in the past by institutional investors as short-term investments," Noltsch said.
"Liquidity was parked in these funds – even though the underlying assets, i.e. the properties, were not liquid.
"Open-ended real estate funds experienced fund unit redemption requests that could not be fulfilled during the financial crisis.
"Liquidity problems were caused due to the lack of an immediate market for properties or only the possibility of a distressed sale."
Noltsch said the problems the funds had encountered in recent years were a side effect of the low interest rate environment, which he predicted was here to stay.
He said it was difficult to sell fund assets at a time when there had been no interest in transactions.
He added that the funds had recently seen an increase in inflows across the market and had a "big future ahead".
However, Commerzbank will remain in charge of those GOEFs currently winding down, Noltsch said, with the Depotbank's employees to be offered the chance to transfer to BNP.
