KOMMERSANT. A subsidiary of German lender Commerzbank, Eurohypo, that specializes in lending real estate developers against collateral of commercial real estate is to sell its Russian credit portfolio of around $1 bln, three sources on the banking market told Kommersant. “Eurohypo decided not to extent valid credits issued to Russian clients, the amount of which is roughly $1 bln as of today, and is exploring the option to sell them,“ the newspaper’s source close to the bank said. “Eurohypo is going to divest its Russian credits,” said another source close to the bank adding that over the past six weeks Eurohypo’s borrowers have also been seeking ways to have their credits refinanced at other banks, Sberbank in particular.
Sberbank declined to give official comments, but the paper’s source at the state-run bank confirmed information. The Russian office of Eurohypo declined to comment. Heinrich Frömsdorf, representative of German Eurohypo, told Kommersant that he cannot confirm information about Eurohypo’s departure from the Russian market as no relevant decision was taken, and he left without comments information on the sale of the Russian credit portfolio.
Eurohypo AG is a 100% subsidiary of German Commerzbank, specializes in lending commercial real estate projects, and also operates on the public debt market. The Russian representative office was opened in 2005 and the bank issued credit facilities to Russian developers through the parent company.
“Eurohypo offers quite first-class assets, it has no bad debt," said a source familiar with the bank’s offer. According to the newspaper’s respondent, Eurohypo issued loans to build in Moscow Aurora business center, Metropolis retail center, Severnoye Domodedovo production and logistics facility, a chain of Marriott hotels and Legion office center.
“It is evident that expectations of the company that entered the Russian real estate lending market before the crisis missed the mark as the value of assets did not come back to the pre-crisis level," noted Sergey Bessonov, president at New Building Investment, adding that the Russian real estate market, however, is growing and Eurohypo’s plans to scale down business in Russia, apparently, are to a large extent driven by the problems at the parent company. Eurohypo AG posted $1.2 bln losses in 2008 and $515 mln in 2009. After the European debt crisis began in 2011 the bank again posted losses largely because of the Greek bonds on books. From January through June 2011 the lender’s losses amounted to €871 mln.
