Germany’s DZ Bank is working with Goldman Sachs to explore strategic opportunities for its DVB subsidiary, say sources.
It is unclear whether a formal mandate has been signed between the entities; however, parent company DZ Bank began working with the US investment bank last week on possible divestment scenarios, say sources. Those scenarios could include the sale of all or part of DVB and its transportation exposure.
DVB Bank and Goldman Sachs declined to comment.
DVB Bank became a fully-owned subsidiary of DZ, Germany’s second-largest lender, this summer, following the squeeze-out of minority shareholders. That move allowed DZ to restructure the business and push forward the sale of the transportation lender, say sources.
The possible sale of the German transportation lender has been on the cards for the past few years, but this is the first time that Goldman Sachs has been linked to the activity.
DVB has a recognised franchise in aviation and rail and sources say, if confirmed, the sale should attract a lot of attention from potential bidders. The shipping loan portfolio, however, would be more challenging to move, sources add.
DVB recently returned to the asset-backed securitisation market with a $722.5 million deal. Proceeds from the offering will be used to acquire 35 aircraft on lease to 30 lessees located in 24 countries, plus one aircraft, an Airbus A330-200, that is off lease.
The transport financier slid to a 2017 half-year pre-tax consolidated net loss of €506.3 million ($600 million) from a net profit of €14.1 million in the year-earlier period, for which it blamed excess capacity in the shipping market.
However, the bank insisted in a first-half earnings report that aviation demand would remain solid. It said it planned to sustain the “positive business development” in aviation finance and strengthen its “earnings power”.
DVB indicated the first-half result was dominated by a significant increase in the allowance for credit losses to €445.3 million, versus €83.4 million in the year-earlier period, “reflecting market developments” such as oil price uncertainty and excess shipping containers.
At the beginning of August, DVB received a €500 million contribution to income from DZ.
The bank added that new business in aviation finance, and in land transport finance, “showed stable, though subdued development”, reflecting high liquidity and intensifying competition.
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