Optimising the overall result
Around 90% of the former WestLB portfolio has been wound up. The risks of the portfolio in the stress scenario have fallen by 69 per cent since 2012. Costs have been reduced by 67 per cent compared to 2012. The EAA develops a bundle of measures to continue winding up the remaining portfolio while at the same time optimising the winding-up result, and is starting to implement them.
~90% wind up
Management structure streamlined
Standard & Poor’s raises its long-term rating for North Rhine-Westphalia and the EAA. The rating agency also notes that the state has become less likely to be called on to meet its obligation to offset the EAA’s losses.
Staying power pays off
The portfolio is nominally smaller and of better quality than expected at this time. In a favourable market environment, the EAA has been able to build up more substantial reserves at the same time. The EAA has options to achieve its original 2027 winding-up targets ahead of schedule.
Reduction means added value
Change management as a permanent task
Portfolio reduction requires constant adjustments. The EAA consistently aligns its entities to the requirements of the ongoing portfolio reduction: IT and operations services are transferred to a private company, and the portfolio management subsidiary is also privatised.
Foreign establishments successfully wound up
“The core of our tasks today is to combine a motivated team, stable IT and high regulatory standards with strict cost management.”
Reducing legal risks; securing portfolio management
The EAA is able to make crucial progress on the reduction of legal risks. It successfully ends complex legal proceedings concerning municipal derivative contracts – despite negative initial verdicts – by means of settlements. At the same time, it takes over its largest IT and operations service provider and optimises its services for the EAA’s portfolio.
Staying on course – with tenacity and expertise
Well ahead of schedule
By the end of the year, more than three quarters of the banking book and more than two thirds of the trading book have been wound up. The share of very good, good and medium positions in the portfolio increases to 67 per cent.
From bad bank to good bank
Foresight safeguards value
Long-term strategies pay off. The EAA completes extensive restructuring and sells material equity investments. It privatises a bank and sells a company specialising in personal home loans. The establishment of a subsidiary for portfolio management ensures operational stability.
Privatisation as a decisive step forward
Smooth business operations
The EAA adapts its process structures to the changed portfolio and to the increased regulatory requirements. It optimises value chains and expedites the wind-up at the same time. By the end of the year, the value of the portfolio has fallen to below EUR 100 billion.
A tour de force
The EAA takes over a second portfolio which is much bigger than the first, with a volume of EUR 124.4 billion. It includes a trading portfolio with derivative products. The internationally connected WestLB moves completely off market
Exposures in almost 100 countries
The model works
The EAA quickly expands its expertise and develops its own measurement and control metrics so as to optimise the winding-up of the broadly diversified international portfolio. The confidence of international investors gained through this secures refinancing
“For the taxpayer, the establishment of a winding-up agency provides an ‘option to wait’. This can reduce the costs of state aid.”
Professor Markus Rudolf, WHU – Otto Beisheim School of Management
Start-up acquires a multi-billion euro portfolio
The EAA begins its work from square one in the absence of any blueprint for the public-sector agency. When it starts its work, barely a dozen staff members are responsible for a EUR 77.5 billion portfolio of loans, including some extremely complex securities.