Depfa Bank, the Dublin-based lender rescued by German authorities during the financial crisis, saw its assets increase by 6 per cent in the first half of this year – even though it was put into wind-down in 2014.

The lender’s assets rose to €39.1 billion during the period. However, this was mainly attributed to foreign-exchange and interest-rate changes during the six months, Depfa said in its interim report, published this week. It did not undertake any new business.

While the bank said it expected its assets, which contracted by 25 per cent during 2015, to continue to over the remainder of the year, this will be influenced by market factors, including the impact of the UK's vote to leave the European Union.

Impact

While Depfa, which has 128 permanent employees in Dublin, sees little direct impact of Brexit on its business, it said the longer-term “related impacts on asset prices and global economic conditions remain uncertain and could have an adverse impact” on the group.

Depfa, a provider of public-sector finance, was bought by Munich-based property lender Hypo Real Estate (HRE) for €5.7 billion in 2007. However, a little over a year later HRE was force to turn to the German government for help after the collapse of Lehman Brothers when Depfa was unable to fund itself in the market.

HRE, which required a €10 billion capital injection from Berlin during the financial crisis, agreed under an EU state-aid restructuring plan to sell Depfa by the end of 2014.

Sale

While a preferred bidder – a joint offer from US investment firm Leucadia National and Massachusetts Mutual Life Insurance – was picked, the German government abandoned a sale two years ago saying it would get more money by running it down itself.

Depfa was subsequently transferred to a German bad bank, FMS Wertmanagement (FMS-WM) at the end of 2014.

The Dublin-based bank reported a pretax loss of €54 million during the first six months of the year, down from a €61 million shortfall for the same period in 2015. FMS-WM has sought to accelerate the wind-up of the bank this year, with Depfa having bought back €5.6 billion of its bonds in the market up until the end of July.