DHB sale to face regulatory scrutiny

New owners Attestor and Patrick Bettscheider, founder of investment bank MainFirst, are likely to face investigation into their ability to support DHB, particularly in times of crisis. Their financial resources will also be put under scrutiny, as well as their commitment to the bank.

Fitch warns that "regulatory scrutiny is likely to be particularly intense" as strategic buyers, such as banks, are "preferred by regulators". They are more likely to be able to offer "restructuring, consolidation, synergies and reliable access to capital and funding sources", compared to financial investors, which Fitch perceives as "less strategic" and "less willing or able to address the problems".

It also stated that the change in ownership would be "unlikely to address the German bank's capital and funding weaknesses" and would not affect its current CCC viability rating or BBB long-term issuer default rating. This credit rating measures companies' credit risk and likelihood of entering into receivership.

The ownership consortium's plan to convert €40m of mandatory convertible bonds into equity will, according to the credit agency, only marginally strengthen DHB's vulnerable capitalisation.

Lone Star Funds announced the sale of DHB to Attestor and Bettscheider earlier this week, following four years of ownership and injecting more than €500m to strengthen the bank's core capital position.

DHB is a small bonds bank headquartered in Düsseldorf, specialising in commercial real estate financing for domestic and international real estate investors. It provides small bond loans in the region of €10-50m and also supports syndicated loans with other lenders.

Its core markets are Germany, the Netherlands and metropolitan areas in France and Spain.

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• Topics
• DACH
• Buyouts
• Exits
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• Germany
• Lone Star Funds