Commerzbank AG (CRZBY)

[Enterprising Investor]

Oaktree, JPMorgan Buy $3.2 Billion of Loans From Commerzbank (7/01/15)

Commerzbank AG sold 2.9 billion euros ($3.2 billion) of commercial real estate loans to Oaktree Capital Group LLC and JPMorgan Chase & Co., making headway with its plan to reduce riskier assets.

Germany’s second-biggest bank ceded 700 million euros of distressed German debt to Oaktree, a U.S.-based alternative investment firm, the Frankfurt-based lender said in a statement Wednesday. It also sold 2.2 billion euros of mixed non-performing and performing loans backed by European assets to a group controlled by JPMorgan and Lone Star Funds. It sold the assets at a 3 percent discount, it said.

While the bank expects the sale to reduce earnings by 65 million euros in the second quarter and 20 million euros in the third quarter, respectively, it will release 105 million euros of capital, bolstering the bank’s core capital. German lenders are cutting exposure to riskier assets as they shore up their balance sheets before global rules designed to prevent a rerun of the 2008 financial crisis, known as Basel III, take full effect.

“We are significantly reducing both risk and complexity,” said Sascha Klaus, divisional board member for non-core commercial real estate assets. “In this respect we are taking advantage of market opportunities, in order to achieve best possible results through competitive bidding procedures.”

Commerzbank’s exposure at default in shipping and commercial real estate stood at 30 billion euros as of March 31, it said in the statement. The sale reduces the volume of non-performing commercial real estate loans by 1.3 billion euros, down from 3 billion euros at the end of March, it said.

http://www.bloomberg.com/news/articles/2015-07-01/oaktree-jpmorgan-buy-3-2-billion-of-loans-from-commerzbank