JC Flowers and Apollo circling Irish-based bank

EAA Covered Bond Bank being sold under wind-up of German bank WestLB

US private equity firms JC Flowers and Apollo are among bidders circling a Dublin-based bank which is being sold under the wind-up of failed former German lender WestLB.

The bank, EAA Covered Bond Bank, a specialised bank focused on issuing covered asset securities backed by public-sector assets, has also attracted the interest of Texan private equity giant Lone Star, European banking suitors and including a Chinese lender, according to sources.

IFSC-based EAA Covered Bond bank, formerly WestLB Covered Bond Bank, has almost €500 million of equity and €2 billion of assets.

The sale is result of gradual running down of much of WestLB assets that were put into a bad bank, called Erste Abwicklungsanstalt, or EAA, in 2012. The Dusseldorf-based WestLB, which made a failed attempt to become a global investment bank, became one of the biggest German casualties of the 2008 financial crisis. This triggered as much as an €18 billion bailout by the state and rival lenders.


Preferred bidder

It is understood that a shortlist of bidders in a process managed by


is due to be completed within weeks, with a preferred bidder likely by the end of July. The sale, which has been dubbed Project Blue, is expected to be completed by the end of September.

The winning bidder for the Dublin unit would secure a potentially valuable, but restricted, banking licence in the EU. Irish law allows for lenders to be established in the country to issue public sector, mortgage and commercial property loans.

Any transaction would need the ultimate approval of the European Central Bank.

JC Flowers, led by former Goldman Sachs partner Chris Flowers, has been in the race for a number of Irish financial companies that have been put on the market since the onset of the financial crisis.

In 2010, JC Flowers made a shortlist of bidders for EBS. It also made failed attempts to take over Irish Life and Depfa Bank, the then Irish unit of German lender Hypo Real Estate which ran into trouble in September 2008.

Number of portfolios

Apollo was also involved in the bidding for Depfa and Irish Life, which went on to be acquired by Canadian life assurance group Grest-West Lifeco in 2013.

Apollo subsequently bought a number of portfolios of Irish commercial loans and mortgages, mainly from Lloyds Banking Group as it retreated from the country having racked up billions of euro of bad loans during the crisis.

Lone Star has been among the most acquisitive private equity firms snapping up Irish property and mortgage loans in recent years, mainly from Nama and the liquidators of Irish Bank Resolution Corp.

Spokeswomen for EAA, JC Flowers and Apollo and a spokesman for Lone Star declined to comment.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times