Potential Buyers and Valuation
German retail and business lender Degussa Bank’s sale has been put on hold due to financial difficulties faced by its owners. These difficulties arise from their involvement in a trading system scam at another bank they possess. Sellside advisor PwC is expected to send information packages on Degussa Bank to prospective buyers next month, with the aim of finalizing a deal by the end of the year. The bank is estimated to be worth around 400 million euros ($463 million). Core banking activities alone could be valued at approximately 200 million euros, or roughly its book value. Other services, such as real estate and insurance brokerage, could also be valued at a similar amount.
Interested Parties
Private equity firms, banks, property managers, and insurance brokers are expected to show interest in acquiring Degussa Bank. Some sources predict that the bank’s total valuation could be closer to 200 million euros. Degussa Bank is currently majority-owned by Christian Olearius and Max Warburg, who acquired it from Dutch lending institution ING in 2006. Olearius and Warburg also own Hamburg-based bank MM Warburg. When contacted for comment, Degussa Bank’s owners and PwC declined to respond.
Legal Issues and Financial Support
In a separate case, German judges ordered MM Warburg to pay 176 million euros for its involvement in a multi-billion-euro fraud trial related to fake tax refunds, considered Germany’s largest post-war fraud trial. The bank is currently appealing the decision. Olearius and Warburg have previously stated their intention to provide financial support to MM Warburg in case the bank has to pay related to its participation in the so-called cum-ex transactions.
Overview of Degussa Bank
Originally a part of the precious metals group Degussa, Degussa Bank operates on the premises of many German companies, positioning itself as a worksite bank. Additionally, it has a property unit called Industria Wohnen, which offers closed real estate investment funds among other services, and owns insurance brokerage firm Prinas Montan. In 2019, Degussa Bank reported pretax earnings of 26 million euros.
Note: The values mentioned in this article are subject to change. It is based on information from knowledgeable sources.
