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Commerzbank Scales Down Non-Core Assets with Tanker Sale
Germany'sCommerzbank AG (CBK.XE) said Monday it sold a credit portfolio of 14 chemical tankers as it pushes forward with efforts to divest non-core assets.
The transaction includes non-performing loans worth around 280 million euros ($376 million) in total and full exposure will be taken over by the purchasing party, an affiliate of Oaktree Capital Management L.P.
"The positive capital effect resulting from the transaction is testimony to the appropriate valuation of the ship loans portfolio," said Stefan Otto, a manager at Commerzbank's shipping unit, Deutsche Schiffsbank. The sale reduces risk-weighted assets by EUR165 million and results in an overall positive net capital relief of EUR8 million.
Deutsche Schiffsbank was once one of the world's largest shipping lenders. About a year ago, Commerzbank said it was targeting a 40% reduction in shipping loans by 2016.
The sale will benefit the risk profile of the bank's shipping segment, lowering non-performing loans by about 6% at Deutsche Schiffsbank, compared with the end of September 2013, and won't significantly impact fourth-quarter earnings, Commerzbank said.
In June, the bank said it isn't planning a firesale of its shipping credit portfolio, which amounted to around EUR18 billion at the time. The bank was responding to market speculation that it was struggling to sell the portfolio, and that bids were so low that the necessary writedowns related to a sale would jeopardize the bank's equity.
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