German financier Eurohypo expects new business to grow further in 2010, board chairman Frank Pörschke told PropertyEU in an interview at Mipim last week. 'I expect we will see a higher single-digit billion-euro figure representing new business this year.'
German financier Eurohypo expects new business to grow further in 2010, board chairman Frank Pörschke told PropertyEU in an interview at Mipim last week. 'I expect we will see a higher single-digit billion-euro figure representing new business this year.'
He added that new loans are currently being provided at average loan-to-value ratios of 50-60%. 'This is a good time to do business. We haven't felt this comfortable about new business for the past three years.'
In February, Eurohypo reported new business totalled EUR 10 bn in 2009, with new loans accounting for EUR 3 bn and renewals for the remainder. The UK accounted for 58% of the international business or a third of the EUR 3 bn in new business, Pörschke said. Germany accounted for EUR 1.3 bn of the total.
Europe's second-largest financier saw losses narrow in 2009 to EUR 372 mln from EUR 1.4 bn a year earlier.
Pörschke said Eurohypo's restructuring programme was continuing as planned and that the financier would return to profit in 2011. Under the plan, some 396 jobs will be shed by the end of next year, with Germany accounting for two-thirds of the losses. So far most of the cutbacks have been outside Eurohypo's home market, he added. 'We have now negotiated a social plan for Germany and will start centralizing some functions later this year. New business will remain decentralized but we will centralize loan management functions in Eschborn.'
He added that 2010 would be a year of transition for Eurohypo. '2009 was a terrible year and 2010 won't be easy, but the worst part of the crisis is over.' Occupier market still pose some risks, however: 'I'm not overenthusiastic,' he said. 'We may still see some correction in some markets.'
According to a report released last week by Savills, the provision of development finance has re-emerged into the market. Eurohypo is currently one of the leading lenders in this segment, Pörschke confirmed. 'We wouldn't be interested in speculative development in a secondary location in Frankfurt, but we are interested in good projects in good locations.' In the UK, Savills sees development financing becoming available primarily for residential schemes, but Eurohypo is prepared to look at all segments, Pörschke said, providing that 50% of the project is already preleased.
Following a EUR 10 bn injection in state aid in 2008, the European Commission has instructed Eurohypo's parent company Commerzbank to sell its property finance unit by 2014. Pörschke said all options - including a trade sale, a spin-off or an IPO - were still open.