Dublin-based Depfa sold to German ‘bad bank’ for €320m

Bank will continue to operate in Dublin but will not take on any new business

Dublin-based Depfa Bank plc has been taken over by Germany's state-owned bad bank FMS Wertmanagement six years after it almost collapsed in the financial crisis.

The bank was sold to FMS for a reported €320 million by Hypo Real Estate (HRE), the Munich property lender that bought Depfa for €5.2 billion in cash and shares in 2007.

In a letter to staff, Depfa’s new management said the bank would not be integrated into FMS corporate structures and would remain on as a “independent subsidiary of FMS-WM with a clear strategy to run off assets in a controlled manner”.

The bank’s assets are largely understood to be sovereign bonds still with several decades to run.


The takeover is the final chapter in a drama that began in 2008. Depfa experienced an existential liquidity crisis when the collapse of Lehmann Brothers froze up financial markets worldwide.

The Dublin bank and its HRE parent survived thanks to a €124 billion package of loans and guarantees made available by the federal government in Berlin and by German private banks. In 2009 Berlin nationalised HRE and squeezed out previous owners.

Yesterday’s transfer of ownership to FMS keeps Depfa in German state ownership but off the books of HRE.

Under its new owners, Depfa will continue to operate from Dublin but will not take on any new business.

Fiona Flannery, who was previously chief risk officer, will take over as chief executive from Tom Glynn. Holger Horn, who was previously head of corporate and asset finance, will be the new chief risk officer.

Noel Reynolds will continue as chief financial officer and chief operating officer.

Patrick Ryan, who was a member of many Depfa boards between 2006 and 2009, will succeed John Bourke as chairman of Depfa's board of directors.

Three new executives will join the bank from FMS Wertmanagement, which was set up in 2010 as bad bank for HRE and Depfa assets (see panel).

Transfer approval

Last May, Berlin abandoned plans to sell Depfa to a private owner despite the highest bidder offering €320 million. German officials say they would retain the bank, as doing so would earn more money for the taxpayer in the long term.

Approval for the transfer of Depfa ownership came from the Central Bank of Ireland last Tuesday, allowing Berlin to meet a deadline imposed by the European Commission to dispose of Depfa by the end of 2014.

Derek Scally

Derek Scally

Derek Scally is an Irish Times journalist based in Berlin