MAJOR LEGACY ASSETS – GOOD WIND-DOWN SUCCESS.
We have combined all loan portfolios that no longer form part of our core business and are in large part non-performing in our Non-Core Bank. These holdings, most of which originate from before 2009, are largely covered by the guarantee provided by our federal state owners. We are resolutely winding down these problematic legacy portfolios – many of which stem from the Shipping business – in a manner that minimises losses as far as possible. Just in 2016 we reduced our legacy assets by about €10 billion (EAD): we transferred five billion euros’ worth to the federal states’ public-law institution (AöR) and wound down a further sum of about five billion euros in day-to-day business.
Overall, our team of restructuring experts has succeeded in cutting the Non-Core Bank’s holdings from more than €80 billion in 2009 to slightly over €20 billion in 2016. This corresponds to a REDUCTION OF WELL OVER 70 Per cent. This reduction came about by way of both early and regular repayments as well as loan disposals and structured solutions. The Non-Core Bank’s intention for the planning period through to 2019 is to further reduce its non-strategic and capital market holdings significantly while safeguarding value. The Non-Core Bank holds loans from the real estate and aviation sectors, among others, but portfolios related to shipping account for by far the largest proportion. For nine years now, this sector has been in a worldwide crisis of historic proportions with the corresponding fallout on shipping companies.
We reallocated our portfolios in 2016 to provide the clearest possible view of our operational strength and healthy Core Bank. This transaction involved the transfer of primarily non-performing loans to the amount of €6.6 billion to the Non-Core Bank, where they are now being processed and further reduced. At the same time, we transferred good portfolios to the amount of €4.6 billion from the Non-Core Bank to the Core Bank. By resolutely winding down the portfolio, the Non-Core Bank is reducing the Bank’s risk-weighted assets and therefore also easing the pressure on the Bank’s equity capital. As a result, we are improving our Bank’s overall risk-bearing capacity and establishing the conditions for profitable new business.