British investment firm Attestor Capital, which owns 17 per cent of Irish mortgage lender Dilosk, has abandoned plans to buy a Dublin-based covered bonds bank due to conditions that regulators were insisting on to approve the deal.
Irish-based EAA Covered Bond Bank, which was originally part of failed German lender WestLB, was put on the market in 2016 and a deal was reached with Attestor the following year. WestLB's assets had been put into run-down in 2010 by a bad bank called Erste Abwicklungsanstalt, or EAA.
"The sale of the EAA subsidiary EAA Covered Bond Bank (CBB) in Ireland cannot proceed as planned," EAA said in a statement posted on its website on Tuesday. "The investor has informed the EAA that the competent supervisory authorities will only approve the transfer subject to additional conditions. In view of the changed circumstances, the parties have now agreed to cancel the purchase agreement."
Regulatory officials in the Central Bank of Ireland and European Central Bank’s banking supervision unit were involved in assessing the transaction.
Identity
EAA and Attestor have never confirmed The Irish Times’ previous reporting about the identity of the agreed purchaser. EAA Covered Bond Bank will now be wound up.
Christian Doppstadt, a member of the EAA managing board, said that the size of EAA Covered Bond Bank's balance sheet has fallen since the agreed sale in 2017, "greatly limiting any negative consequences for the EAA wind-up plan".
The Irish bank mainly holds bonds issued by public sector borrowers in Europe. Its balance sheet has been cut from €10.9 billion in 2010 to €1.6 billion as at the end of 2019.
Attestor, founded in 2011, focuses on investing in European businesses that are growing or in need of restructuring.
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 and needed a bailout of as much as €18 billion by the state and rival lenders. Much of its assets were put into EAA in 2010.
