Irish unit of failed German lender surrenders license
Ireland-based EAA Covered Bond Bank, part of German lender WestLB that collapsed during the financial crisis, surrendered its banking license after an attempted sale of the business failed a year ago.
The company, which was renamed Erste EAA Ireland last week, will go into liquidation next year, having transferred its remaining portfolio in 2020 to its parent company, a German bad bank called Erste Abwicklungsanstalt, or EAA.
EAA was formed in 2009 to take over and liquidate a large portion of WestLB’s assets after the Düsseldorf-based bank imploded.
The return of the EAA Covered Bond Bank’s license to the European Central Bank and the planned liquidation “will allow us to close the bank well before the originally planned date of end 2027”, said Christian Doppstadt, member of the board of directors of the EAA.
He said it would be “more economically advantageous” than expected in March, when a planned sale of the unit failed.
EAA Covered Bond Bank, which was originally part of WestLB, went on the market in 2016. However, a planned sale of the company to UK investment firm Attestor Capital, which owns 17% of the mortgage lender Irish Dilosk, was abandoned 12 months. it’s because of the terms regulators insisted on approving the deal.
The Irish bank mainly held bonds issued by public sector borrowers in Europe before the transfer of its portfolio to Germany. Its balance sheet rose from 10.9 billion euros in 2010 to 1.6 billion euros at the end of 2019, including 525.44 million euros in capital reserves, well beyond regulatory requirements, according to its latest set. of public accounts.
WestLB, which failed in its bid to become a global investment bank, became one of Germany’s biggest victims of the 2008 financial crisis and needed a bailout of nearly € 18 billion per the state and rival lenders. Much of its assets were invested in EAA in 2010.