Practice/Industry Group Overview
Economic and regulatory changes have sparked renewed activity in debt and other distressed-asset sales by financial institutions, particularly in Europe. We expect that Basel III/CRD IV and other regulatory pressures will drive European financial institutions to contemplate divestitures in Europe, the United States and other jurisdictions.
Purchasers of bank portfolios and businesses need to address the risks posed by the acquisition of these new business units or large portfolios of troubled loans and securities, especially in the commercial and residential real estate sectors.
For the bank sellers, the choice of strategies depends largely on competing objectives, including elimination of risk associated with the assets; retention of customer relationships; avoidance of loss recognition; preservation of tax benefits; timing; and regulatory, investor and political considerations. Evaluation and implementation of an appropriate strategy require a multidisciplinary approach to the many legal issues involved.
Depending on the circumstances and objectives, a variety of potential solutions are available, including the creation of “good bank-bad bank” structures, seller-financed asset dispositions and the use of credit derivatives that allow an investor to track the risk on a specific pool of assets, and not the general credit risk of the party holding those assets.
Mayer Brown has a significant track record of advising buyers and sellers of financial institution business units, as well as portfolio investments in, and the activities of, distressed financial institutions. This includes advising clients on the issues of risk, liquidity and equity control, as well as on the sale of the assets themselves.
We offer our clients a team of lawyers and other professionals with the knowledge, experience and judgment to handle all of the legal and regulatory aspects affecting these transactions. We understand the unusual, and often subtle, issues that arise in these matters and so are able to work effectively with financial institutions, their officers, directors, shareholders, investors and regulators in addressing and successfully resolving these challenges.
We are also recognized as one of the leading law firms in the European distressed debt and nonperforming loans ("NPL") market. We regularly represent sellers and buyers in major NPL transactions as well as in their day-to-day trading activities. Documents created by our firm have established market standards, particularly in Germany, and are indirectly used by a variety of participants.
In addition, our restructuring team provides comprehensive bankruptcy and realization analyses with regard to distressed loans in acquired portfolios, including commercial real estate loans. Our extensive experience representing private equity, real estate and hedge funds also gives us insight as to the needs and goals of both fund managers and institutional investors.
Our experience includes the financing of NPL transactions via leveraged loans and securitizations.
- Albis Capital. We advised Albis Capital on the purchase of Austrian Autobank AG from DSK Leasing Verwaltung AG
- ALBIS Group. We advised the German listed company ALBIS Leasing AG, Hamburg on the acquisition of 48,8 % of shares of Gallinat-Bank AG, a private German bank based in Essen.
- Ally Financial Inc. We represented Ally Financial Inc. (f/k/a GMAC) in the sale of the European mortgage assets and businesses of its subsidiary, Residential Capital, LLC, to affiliates of certain funds managed by affiliates of Fortress Investment Group LLC.
- Banca Cívica, S.A. Ramón y Cajal represented Banca Cívica on the sale of a non performing loan portfolio (€800 million) to a foreign investor
- Banco Popular de Puerto Rico. We represented Banco Popular de Puerto Rico in the sale of a portfolio of distressed construction and commercial real estate loans to a newly created joint venture that is majority-owned by a limited liability company created by Goldman Sachs and Caribbean Property Group, in which Banco Popular received in consideration a partial cash payment, a note payable by the joint venture as seller financing and a minority equity interest in the new joint venture.
- Bank of America, N.A. We represented Bank of America in its bulk loan auction and sale of 31 commercial real estate loans with an aggregate principal balance of almost $1 billion to the winning bidder— CSMI Investors LLC, a joint venture between Invesco Real Estate, Square Mile Partners III and Canyon-Johnson Urban Fund III, L.P.
- Bank of N.T. Butterfield. We represented CIBC and The Carlyle Group as lead investors in a $550 million equity investment to recapitalize The Bank of N.T. Butterfield & Son Limited, Bermuda’s largest independent bank.
- Capital One. We represented Capital One in its $9 billion acquisition of ING Direct USA, ING Group NV’s US online banking unit.
- Carlyle Investment Management. We represented Carlyle Investment Management on its acquisition of the management contracts on $5.1 billion in collateralized loan obligations and other credit assets from Stanfield Capital Partners LLC. The $5.1 billion transaction consisted of $4.2 billion in CLOs and $950 million of managed accounts.
- CIBC. We represented CIBC World Markets and its parent company, Canadian Imperial Bank of Commerce, in the sale of their US domestic invest¬ment banking, equities, leveraged finance and related debt capital markets businesses to Oppenheimer & Co. Inc.
- Corealcredit Bank AG. We advised AHBR (now Corealcredit Bank AG), the German mortgage bank, on the sale of a €3.5 billion fully performing international loan portfolio consisting of 140 commercial real estate financings from 13 European jurisdictions involving, inter alia, Polish loans to Hypo Real Estate International.
- Corus Bank. We represented Corus Bank N.A. and its holding company in regulatory enforcement proceedings, including negotiating with potential outside investors and regulators on capital plan and proposed capital infusions.
- Depfa Bank plc. We represented Depfa Bank plc, a subsidiary of Hypo Real Estate Holding AG, in the transfer of approximately €130 billion of risk positions and nonstrategic business areas to FMS Wertmanagement.
- DZB Die Zentralregulierungsbank GmbH. We advised DZB on the acquisition of the majority shareholding in Aktivbank AG.
- Eurohypo AG. We advised Eurohypo AG on the sale (EUR 2.4 billion) of a residential real estate loan portfolio under a joint venture platform with Citigroup.
- German Special Financial Market Stabilization Fund. We represented the German Special Financial Market Stabilization Fund (Sonderfonds Finanzmarktstabilisierung, SoFFin) on establishing the first German bad bank for WestLB. Initially, securities in the amount of approximately €6 billion had been removed from WestLB’s balance sheet. The entire portfolio in the amount of approximately €85 billion has been transferred.
- JC Flowers. We represented JC Flowers during the bidding process for the sale of Berliner Bank by Landesbank Berlin.
- Jive Investments. Represented Jive Investments and other investors in the incorporation of a non-standardized credit right investment fund, denominated Rio Tibagi – Fundo de Investimento em Direitos Creditórios Não-Padronizados in Brazil, and in the raising of funds for the acquisition of a portfolio of distressed receivables of approximately US$540 million.
- Lehman Brothers. We advised Lehman Brothers on the purchase of a €500 million performing loan portfolio from AachenMünchener Lebensversicherung AG by way of a share deal under the German Transformation Act (Umwandlungsgesetz) with a subsequent asset transaction. This was the first public transaction of this kind by a German insurance company.
- Lone Star. We advised Lone Star on the purchase of MHB Bank AG from Norddeutsche Landesbank Girozentrale, and giving advice on all issues regarding banking supervision, tax and antitrust.
- Lone Star. We represented Lone Star during the bidding process for the sale of the Landesbank Berlin Holding AG by the German Federal State Berlin.
- Lone Star. We represented Lone Star in the acquisition of 90 percent of the shares in IKB Deutsche Industriebank AG, a bank that specializes in midsize corporate banking, from KfW Bankengruppe, the German-based state-owned development bank.
- Lone Star. We represented Lone Star on the sale and financing of a portfolio (€3.6 billion) mainly consisting of real estate loans applying a combination of a universal succession in accordance with the German Transformation Act (Umwandlungsgesetz) and a consecutive asset sale.
- Ocwen Financial Corporation. We represented Ocwen Financial Corporation and its wholly owned subsidiary, Ocwen Loan Servicing, LLC, in its $1.3 billion acquisition of the US mortgage servicing business, HomEq Servicing, from Barclays Bank PLC.
- Stefan Allesch-Taylor and Paul Hammett. We represented Stefan Allesch-Taylor and Paul Hammett on the acquisition of the majority of the shares in NordFinanz Bank AG, a private bank with locations in Bremen and Munich, from seller E Clear PLC (in administration).
- Tufts University/Omidyar Tufts Microfinance Fund. We represented Omidyar-Tufts Microfinance Fund and Teachers Insurance and Annuity Association on their investment in Procredit Holding AG.
- Wells Fargo & Company. We represented Wells Fargo & Company on the acquisition of WestLB’s subscription finance portfolio, which contained approximately $6 billion in commitments (with approximately $3 billion outstanding). The representation included the due diligence on both the U.S. and EU loans in the portfolio, the negotiation of the definitive purchase agreement, and the underlying assignments of each of the deals at the loan level.