German bank Helaba is aiming to distribute a larger volume of real estate loans into the country’s savings banks market by offering circa €1 million participations to prospective syndication partners.
Under the new approach, Helaba is targeting more than 100 of Germany’s savings banks – known as Sparkassen – including through its online lending portal. The bank’s previous approach involved syndicating €10 million-plus participations to Germany’s larger savings banks.
Last November, in an early deal under the new strategy, Helaba syndicated a €65 million portion of a €140 million office loan secured by a Frankfurt office building to 12 German saving banks.
By May, Helaba is expecting to syndicate €30 million to 18 savings banks from a €100 million financing of a German retail asset. The bank is also currently in talks with 20 savings banks, with the aim to syndicate €40 million of an €80 million loan for an office building in Germany.
“We are connected to a large number of savings banks in Germany and we want to increase our syndication activities with them,” Norbert Kellner, Helaba’s head of debt capital markets told Real Estate Capital.
“Our aim is to increase syndication volumes from €1.3 billion last year to €2 billion in 2018, with saving banks taking one-third of the total,” Kellner added.
Helaba is planning to expand syndication activities to “fine-tune” the management of its own assets and liabilities, the bank noted in its latest financial report, which revealed a 16.3 percent fall in net new business last year to €8.7 billion. Kellner noted last year’s new lending volumes, including syndication, totalled €10 billion, which was higher than expected, particularly in Germany.
In France, however, competition was “fierce”, Kellner said, while in the US, several deals were pushed forward and closed in Q1 2018, rather than by the end of 2017.
In 2015, Helaba put a new debt distribution structure in place to support the bank’s syndication drive. “We created a new syndication team in London and Frankfurt, with the aim to increase our syndication deal volume from €500 million in 2015 to €1 billion in 2016, and €1.3 billion last year to €2 billion per year from 2018 onwards,” Kellner said.
To increase syndication activities, Helaba is channelling loan distribution into three areas: savings banks, third-party banks and institutional lenders.
“It’s definitely wise not to concentrate purely on banks or institutions, but also to tap into new opportunities. We think diversifying our syndication base through saving banks makes sense because there’s demand,” Kellner said. “At the same time, we are keen to work together with a number of institutional lenders, such as insurers and debt funds. Within banks, German lenders in the domestic market as well as UK, Polish and Scandinavian lenders could be good players.”
Helaba will limit its small-ticket syndication strategy to loans totalling up to €100 million, with larger facilities to be syndicated to commercial banks and institutional investors.
“From a syndication perspective, we’ll use a relatively smaller loan to serve the saving banks. But from a risk perspective, from a profitability perspective, the deals will be very similar to what we sell to banks or institutional investors,” Kellner noted.