Eurohypo posts big treasury losses as property arm recovers

Eurohypo, the real estate arm of Commerzbank, has posted a loss of EUR 921 mln in its public finance/treasury division during the first half of 2011. However, the commercial real estate arm moved back into black for first time since 2008.

The loss is largely due to a hit of EUR 713 mln taken on Greek bonds, Eurohypo said in a statement, taking the overall pre-tax loss at the Eurohypo group to EUR 817 mln, down from a loss of EUR 215 mln in the same period last year.

The group's commercial real estate business arm fared better, with a pre-tax profit of EUR 29 mln, up from a loss of EUR 53 mln in the same period last year. Eurohypo's foreign business generated a pre-tax profit of EUR 44 mln in the first half, following a loss of EUR 116 mln at end-June 2010.

A Eurohypo spokesman told PropertyEU that the effect of the treasury loss was ‘very negative’ on the overall results. Eurohypo still holds an additional EUR2.2bn in Greek sovereign bonds, he added. However, loan loss provisions fell by 30% compared to the first half of 2010.

Eurohypo also admitted that due to changing market conditions, earnings might be 'weighed down additionally if further measures of realignment in order to solve the European sovereign debt crisis fail to be implemented'.

Last month, Eurohypo announced that its chairman of the board of managing directors, Frank Pörschke, would be leaving the group 'by mutual consent'. Effective 1 September, he will be replaced by Thomas Köntgen, who has been a member of Eurohypo’s board since 2008. The business is due to be sold by the end of 2014, as stipulated by the European Commission.