Loan servicing firm Mount Street has acquired the portfolio manager of defunct German bank WestLB’s legacy loanbook and with it a €29 billion mandate.
Mount Street announced the acquisition of the portfolio management subsidiary of Erste Abwicklungsanstalt (EAA), the bad bank which was formed in 2009 to manage the assets of the former WestLB.
In purchasing EAA Portfolio Advisers GmbH (EPA), Mount Street assumes a contract to manage the €29bn portfolio for EAA. The portfolio transfer and management contract is the largest of its kind completed in Europe and brings the volume of debt which Mount Street manages to around €55 billion.
The €29 billion book contains a mix of performing and non-performing credits. EAA undertook a competitive selection process known as Project Tricorne during the last six months.
Mount Street will take over EPA’s circa 90 staff in London, Düsseldorf, New York and Madrid, following regulatory approval which is expected in the first half of 2017. The firm said that the addition of EPA’s credit portfolio management team to its platform allows the company to diversify its product offer beyond its existing activities in loan and bond servicing.
EPA provides credit surveillance and management products enabling end-to-end portfolio management, from modelling and valuation of single positions to overall portfolio management, restructuring and exit strategies.
EAA was created at the end of 2009 as the asset management company to manage the assets of WestLB. It was founded as a public law agency under the German Financial Market Stabilisation Fund Act. EAA’s shareholders include the German state of North-Rhine Westphalia and its savings banks associations. The agency initially took over the wind-down of WestLB’s €200 billion-plus portfolio which combines non-performing loans, ABS, leveraged credit, asset finance and structured finance assets.
EPS has managed the portfolio for the last seven years and has enabled EAA to reduce the outstanding balance to around €29 billion, remaining ahead of the plan agreed with EAA and its stakeholders.
The acquisition comes amid an expansion drive by Mount Street. Last week, Real Estate Capital reported that the firm has hired Jouke Boomsma from Colliers to run an Amsterdam office. The firm has also hired Serenity Morley from Capita Asset Services as head of primary servicing.
“For the Mount Street brand, this transaction reaffirms our pre-eminent credentials as the counterparty of choice for banks and state entities considering strategic transactions of this nature,” said Ravi Joseph, CEO and co-founder of Mount Street. “For the leadership of Mount Street, who have extensive prior experience in credit, asset finance, and structured finance, this expansion is a natural progression in the evolution of our firm.”
“EPA has a talented team and this transaction represents the next step in the growth of their portfolio management platform. Working together with Mount Street, EPA will offer a broad menu of services to the credit and asset finance markets in Europe,” added Paul Lloyd, managing partner and co-founder of Mount Street.