Germany-based Hypo Real Estate Group yesterday said that it has yet to finalize any plans for the strategic restructuring it announced last month.
A spokesman said it's too early to speculate on the outcome of the strategic review, which includes Depfa First Albany Securities LLC. He said there are multiple options being considered.
"No decisions have been taken yet," head of group corporate communications Hans Obermeier wrote in an e-mail.
Hypo announced late last month a plan to refocus the company and cut more than $250 million in annual expenses by 2011. Officials say the main business will revolve around real estate and public sector finance through "Pfandbrief" lending, a form of covered bonds.
Hypo said it plans to reduce full-time staff to 1,000 from 1,800 by 2011, with two-thirds of the cuts coming outside Germany. It expects to cut another 200 jobs by 2013, once its investment technology program is completed.
Not all the staff reductions will come through layoffs, the company said. Hypo will outsource some functions and also consider divesting businesses that no longer fit into its core strategy.
"Medium term there is a chance to build a bank that might be a little bit boring, but if you run it in the right way ... then we think that this is something that is able to survive and participate actively in the market," chief executive officer Axel Wieandt said in a conference call last month.
Depfa Bank Plc, which was acquired by Hypo in 2007, was hit hard by the credit crisis because it relied on the short-term markets to support its long-term balance sheet, Wieandt said. The problems at Depfa Bank eventually led the German government to provide support to Hypo.
"We don't think this is a sustainable business model moving forward," Wieandt said of Depfa Bank's funding strategy.
Depfa First Albany Securities continues to function normally. Last month it served as senior manager on a number of issues, including $63.8 million of variable-rate bonds for Atlanta and $89.2 million of school district revenue bonds for the Dormitory Authority of the State of New York.
Depfa First Albany last year ranked 17th as a senior manager, working on 62 issues with a par value of $3.3 billion. Depfa Bank ranked 27th as a letter of credit provider, backing four issues with a par value of $534 million, according to data from Thomson Reuters.
