Slim Down

Investors Wait for Germany

banking story chris
Bloated banks need to slim down fast.
  • Why it matters

    Why it matters

    Germany’s banks have nearly a €1 trillion in assets – bad loans and “non-core” business – that could be sold to boost profitability. Investors are circling but won’t wait forever.

  • Facts

    Facts

    • German banks have up to €800 billion in non-core assets and €250 billion in non-performing loans they could sell.
    • Investors have amassed €300 billion in cash to buy these relatively cheap, high-yielding assets.
    • But most banks aren’t willing to sell, reluctant to part with their universal banking aspirations.
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    Audio

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Thomas Landschreiber was one of the few managers who dared to take chances in the aftermath of the 2008 financial crisis, a time when most other investors were running scared.

The co-founder and chief investment officer of Corestate Capital, a Swiss asset manager and property firm, snapped up cheap housing in Germany that nobody wanted. He refurbished the properties, brought in higher-paying tenants, and waited for the market to turn in his favor.

Starting last year, it was time to cash in. Corestate sold most of its so-called “distressed” assets, almost €500 million, in 2013. The Swiss investors earned 1.6 times their initial investment.

“We waited until there was strong demand for these kinds of portfolios to then divest,” Mr. Landschreiber told Handelsblatt Global Edition.

A flood of money has moved into Europe over the past year, all from foreign investors who have discarded their crisis-era caution in the hopes of cashing in on a fire sale, just as Corestate did.

According to Deloitte, investors have amassed a war chest of €300 billion mainly from hedge funds, private equity firms and asset managers in the United States and Britain.

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