HVB reports EUR 2.6 billion loss

26th February 2004, Comments 0 comments

26 February 2004, MUNICH - HypoVereinsbank (HVB), Germany's second largest bank, reported Thursday a loss of EUR 2.6 billion in 2003, triple the red ink the year before, and said it will need to raise EUR three billion in new capital. Munich-based HVB said it would have to forego a dividend to shareholders as a result of the new losses, which comes atop the EUR 858 million in red ink in 2002. The 2002 loss was the first-ever for the bank. The report sent HVB shares tumbling and surprised analysts by the si

26 February 2004

MUNICH - HypoVereinsbank (HVB), Germany's second largest bank, reported Thursday a loss of EUR 2.6 billion in 2003, triple the red ink the year before, and said it will need to raise EUR three billion in new capital.

Munich-based HVB said it would have to forego a dividend to shareholders as a result of the new losses, which comes atop the EUR 858 million in red ink in 2002. The 2002 loss was the first-ever for the bank.

The report sent HVB shares tumbling and surprised analysts by the size of the announced capitalization increase - in the past few days the bank sector had speculated on around EUR two billion.

Despite the overall red ink for 2003, HVB said that its operations were in the process of turning around, after the final quarter of last year produced an operating result of 463 million euros, the second highest in the company's history.

But amid major writedowns of its holdings, particularly at the insurance concerns Allianz and Munich Re, HVB posted a fourth-quarter net loss of EUR 2.28 billion.

HVB, created in 1998 in the merger of Bayerische Vereinsbank and Hypo-Bank, sold its entire 3.2 percent stake in Allianz while reducing its holding in Munich Re to less than 10 percent, from the previous 13.2 percent.

The moves come amid chairman Dieter Rampl's sales of units, totalling over 3 billion euros, in a bid to build up HVB's capital base. HVB divested the Norisbank and Bank von Ernst, and a few weeks ago, it sold its nearly 62 percent stake in the Brau und Brunnen brewing group for EUR 220 million.

In a statement accompanying the business figures, Rampl stressed the upturn being seen in HVB's operations.

"We are very satisfied with business trends in the final quarter of 2003. The sustainability of the improvement shows that the extensive measures we took last year were steps in the right direction," he said.

"We have delivered on our promises. In the strengthened group, we now intend to improve our profitability further in the current fiscal year," Rampl added.

Under the capitalization increase, HVB is to float 214.4 million new shares at a subscription price of EUR 14 per share, about 24 percent below its 25 February closing price. The company will offer shareholders two new shares for every five held.

A syndicate consisting of JP Morgan, Lehmann Brothers and HVB will underwrite the subscription, with the shares to be fully entitled to dividends for the entire 2004 fiscal year, the bank said.

"With this move, we are opening additional options for profitable growth for HVB Group. From now on, we will be able to fully concentrate on the strengthening of our core business," Rampl said.

Overall, HVB in 2003 managed to improve its operations, with operating profits of EUR 1.43 billion representing a big turnaround after a pro-forma loss of EUR 613 million.

At the same time, loan-loss provisions were reduced by some 30 percent to EUR 2.31 billion, HVB said. Administrative costs had been cut by some one-half billion euros to EUR 6.37 billion.

For 2004, HVB Group said it was aiming for operating profits of EUR 1.4 to EUR 1.7 billion, while risk provisions were to be reduced further, to between EUR 1.9 and EUR 2.1 billion.

On the Frankfurt Stock Exchange, the HVB capitalization announcement sent the bank's shares tumbling. By late morning, HVB shares were down 1.6 percent to EUR 18.20.

 

DPA
Subject: German news 

 

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