Reuters: Commerzbank Sells 5 bln eur of UK Mortgages

Germany’s second biggest lender Commerzbank has sold a 5 billion euro ($6.5 billion) portfolio of UK property loans to U.S. peer Wells Fargo and private equity firm Lone Star, Reuters reports.

(Reuters) – Germany’s second biggest lender Commerzbank has sold a 5 billion euro ($6.5 billion) portfolio of UK property loans to U.S. peer Wells Fargo and private equity firm Lone Star.

Commerzbank said on Monday it expects to book charges of 179 million euros related to the transaction this year as the buyers were paying a 3.5 percent discount on the loan portfolio’s book value.

The move improves the lender’s risk profile and reduces its portfolio of non-performing loans by 1.2 billion euros. The transaction, however, has no notable impact on the bank’s Core Tier 1 capital ratio, Commerzbank said.

In total, the exposure at default of the bank’s Hypothekenbank Frankfurt unit – formerly known as Eurohypo – to commercial real estate is around 56 billion euros and its exposure to public finance is around 80 billion euros, a presentation from September shows.