The German HypoVereins Bank (HVB) is to spin off its international real estate banking operations into an independent financial institution headquartered in Ireland.
The newly established Hypo Real Estate Bank International is expected to formally come into existence next month and it will be based at Dublin's International Financial Services Centre. This decision is another coup for the Irish centre and follows a similar move by another German bank, Depfa, to base its public finance bank in Dublin.
The Irish bank will have total assets of €180 billion, more than double the assets owned by either of the Republic's two biggest banks, AIB and Bank of Ireland.
HVB Bank has had a presence in the IFSC since 1997 and currently employs 40 staff. This is expected to increase to about 80 people by the end of this year and the bank has said that its total staff should rise to 120 in 2004. Some 530 staff will work for the bank internationally.
The restructuring of the bank was approved by HVB shareholders earlier this month and will be completed over the summer months.
In Dublin it plans to create a specialised institution financing real estate in Europe and the US. Its focus is on providing big-ticket loans typically of more than €1 billion, with €30 million considered to be the minimum transaction.
Some €1.1 billion of shareholders' funds will be transferred to the Irish-based bank together with a real estate loan portfolio of €16 billion.
The bank currently has one of the biggest loan portfolios in Europe with total lending of €488 billion, with €200 million of mortgage loans.
Some 42 per cent of its loans are to the UK market, 29 per cent in the Netherlands and 15 per cent in France.
After the spin-off the composition of its loan portfolio will alter to the extent that 34 per cent of its loan portfolio will be in the UK, 26 per cent in the Netherlands, 17 per cent in France and 5 per cent in the US.
The bank has sold its $9 billion US portfolio with the staff transferring to the Irish business.
