Westimmo woos suitors by doubling pre-tax profit in H1

German property lender Westimmo says it is 'well positioned' for an intended sale after more than doubling its pre-tax profit in the first half of 2014.

The lender posted a pre-tax profit from ordinary activities of just under €40 mln compared to the previous year’s total of almost €20 mln.

'We are very satisfied with how business has developed in the first half. The excellent results were achieved through a consistent reduction in costs and risks,' CEO Claus-Jürgen Cohausz said.

Cohausz also noted that the bank remains profitable despite restrictions on its activities, including the writing of new business, imposed by the European Commission.

To support a renewed sale process, further restructuring measures were undertaken in the first half of 2014. Among these, the bank transferred all assets that did not fit its profile as a pfandbrief (mortgage covered bond) bank to its owner, German bad bank Erste Abwicklungsanstalt (EAA) with retroactive effect to 1 January 2014.

The carve-out reduced Westimmo's equity by around €450 mln, but despite this the bank continues to have a 'comfortable' equity ratio, the CEO said.

'Westimmo is now a lean and focused pfandbrief bank with a core Tier I ratio of 13.4% and a very low risk potential,' Cohausz said. The managing board expects the bank to deliver positive overall results at the end of the current 2014 financial year, despite the continuing restrictions on its business activities.

'In the first half year WestImmo has again demonstrated its attractiveness and efficiency', said Matthias Wargers, spokesman for the managing board of the EAA. 'We are satisfied with the current progress of the sale process and expect to be able to come to a decision by the end of the year.'

RE-LAUNCHED SALES PROCESS
The EC ordered Westimmo's partner company WestLB to sell Westimmo in return for receiving state aid following the financial crisis. An attempt to sell Westimmo to US private equity group Apollo came to nothing in late 2011.

Some €85 bn of WestLB's assets were transferred to the EAA in 2009 and WestLB was broken up in 2012 due to continuing losses and scandals that required further bail. Westimmo was transferred to EAA on 30 June 2012.

The EAA re-launched the sales process for Westimmo in May this year with bids to be submitted before the end of August. Prospective bidders reportedly include two other German property lenders, Aareal and Berlin Hyp, as well as US private equity firms Blackstone, Apollo and KKR.

On 25 August US private equity firm Lone Star announced it was selling German property lender Düsseldorfer Hypothekenbank four years after acquiring the high-profile victim of the global financial crisis. The financial details of the sale were not disclosed.