Depfa Bank
Encyclopedia
Depfa Bank plc is a Dublin-based German-Irish bank
. It provides financial services to the public sector
and also provides financing for larger infrastructure projects. The name derivates from Deutsche Pfandbrief
bank.
listing in 1991.
At the end of the 1990s, the bank went through a legal restructuring, which led the bank to move its headquarters to the IFSC
in Dublin, Ireland
. In 2002 the Irish government specifically legislated for it. Depfa Bank was purchased by German mortgage giant Hypo Real Estate
a subsidiary of Bayerische Hypo- Und Vereinsbank AG in October 2007. The bank ran into liquidity problems in 2008 as a result of the economic and financial turmoil in the United States. At the same time banking supervision in Ireland was very weak, soon to be proved by the 2008–2010 Irish banking crisis.
Depfa underwrote a group of municipal bonds in the U.S. that subsequently had their ratings downgraded. Under the terms of the underwriting, Depfa was required to buy back the securities after downgrade in the ratings. Because of the difficulties in obtaining short-term funding in the markets at that time, Depfa's liquidity became a major concern.Through a series of bailouts, the German government ended up with 100% ownership of Depfa's parent company, Hypo Real Estate
.
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
. It provides financial services to the public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
and also provides financing for larger infrastructure projects. The name derivates from Deutsche Pfandbrief
Pfandbrief
The Pfandbrief , a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond. The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act. Total volume...
bank.
History
Depfa Bank was established in 1922 under auspices of the Prussian government, and was asked to provide financing for residential construction projects. Its more recent history began in 1950s, when the bank become a federally owned corporation, and was to provide for a wide range of residential mortgages. When the corporation lost its tax-free status in the 1970s, it entered the commercial lending industry, becoming the largest German underwriter of public covered bonds. The bank was privatized in 1990, and obtained a FSEFrankfurt Stock Exchange
The Frankfurt Stock Exchange is the world's 12th largest stock exchange by market capitalization. Located in Frankfurt am Main, Germany, the Frankfurt Stock Exchange is owned and operated by Deutsche Börse, which also owns the European futures exchange Eurex and the clearing company...
listing in 1991.
At the end of the 1990s, the bank went through a legal restructuring, which led the bank to move its headquarters to the IFSC
International Financial Services Centre
The International Financial Services Centre is a major financial services centre in North Wall, Dublin, Ireland. The centre employs 14,000 people and was the brainchild of an associate of businessman Dermot Desmond...
in Dublin, Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
. In 2002 the Irish government specifically legislated for it. Depfa Bank was purchased by German mortgage giant Hypo Real Estate
Hypo Real Estate
The Hypo Real Estate Holding AG is a holding company based in Munich, Germany which comprises a number of real estate financing banks. The company's activities span three sectors of the real estate market: commercial property, infrastructure and public finance, and capital markets and asset...
a subsidiary of Bayerische Hypo- Und Vereinsbank AG in October 2007. The bank ran into liquidity problems in 2008 as a result of the economic and financial turmoil in the United States. At the same time banking supervision in Ireland was very weak, soon to be proved by the 2008–2010 Irish banking crisis.
Depfa underwrote a group of municipal bonds in the U.S. that subsequently had their ratings downgraded. Under the terms of the underwriting, Depfa was required to buy back the securities after downgrade in the ratings. Because of the difficulties in obtaining short-term funding in the markets at that time, Depfa's liquidity became a major concern.Through a series of bailouts, the German government ended up with 100% ownership of Depfa's parent company, Hypo Real Estate
Hypo Real Estate
The Hypo Real Estate Holding AG is a holding company based in Munich, Germany which comprises a number of real estate financing banks. The company's activities span three sectors of the real estate market: commercial property, infrastructure and public finance, and capital markets and asset...
.