Commerzbank AG and Royal Bank of Scotland Group Plc sold about $1.4 billion of unwanted assets, including ships and real-estate loans, to bolster capital.
Commerzbank agreed to sell 18 ships taken over from clients unable to pay their debts for $254.5 million, the lender said in a statement on Thursday. RBS sold loans to units of Deutsche Bank AG and Apollo Global Management for 400 million pounds ($624 million), and is set to receive 225 million pounds selling other loans to an affiliate of Cerberus Capital Management LP, it said separately.
The RBS sales included Irish commercial real estate debts, according to a person with knowledge of the matter. RBS also sold Irish loans to Sankaty Advisors for about 100 million pounds, according to two people with knowledge of the matter, who asked not to be identified because the matter is private. Officials at RBS and Sankaty declined to comment.
RBS has been selling and running down loans in its Irish unit Ulster Bank, placed into an internal bad bank last year, as Britain’s biggest government-owned bank strives to return to profit and full private ownership. Frankfurt-based Commerzbank is selling assets not central to its business to raise capital levels and comply with the conditions of an 18.2 billion-euro ($20 billion) government rescue.
Commerzbank, which announced its exit from ship financing in 2012, took over some vessels from debtors, pooling them in its Hanseatic Ship Asset Management GmbH unit, formed in 2013. HSAM will be sold to a joint venture formed by KKR & Co. and Borealis Maritime Ltd., the bank said. KKR and Borealis have jointly invested more than $600 million in ships and “continue to pursue additional transactions opportunistically,” the companies said in a separate statement.
The deal will be recorded as a loss of about 40 million euros for Commerzbank’s unwanted assets unit in the second quarter, Germany’s second-largest bank said.¼
Commerzbank’s earlier-than-expected sale of HSAM comes as revenue and values of the 18 ships improved and as the euro-dollar exchange rate is “very favorable,” Stefan Otto, the lender’s shipping-unit head, said in an internal memo obtained by Bloomberg News. A sale of HSAM was originally envisaged by 2017, Otto said.
RBS injected 15.3 billion pounds of capital into Ulster Bank from 2008 to 2013 and the Irish unit returned to profit last year for the first time since 2008. The Edinburgh-based bank’s sale of loans announced Thursday, comes near the end of its disposal program of Ulster Bank loans.
RBS shrunk its unwanted assets unit to 22.8 billion pounds at the end of March from 29 billion pounds in December, company filings show.