08. März 2010 
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Depfa Funding IV LP will not pay the next coupon on its Preferred Securities
Dublin-based Depfa Bank plc, a subsidiary of Hypo Real Estate Holding AG (HRE), has determined that its Tier 1 issuing vehicle Depfa Funding IV LP will not make payments on its € 500 million Preferred Securities (XS0291655727) on the next Distribution Payment Date scheduled 21 March 2010.
Depfa is not permitted to pay coupons owing to an insufficiency of adjusted distributable reserves as calculated from the latest available audited annual accounts of the company.
In addition, the company considers servicing these instruments would conflict with the EU Commission’s rules for banks subject to a restructuring aid investigation. In its Communication on restructuring aid to financial institutions of July 2009 the Commission sets out that “banks should not use state aid to remunerate own funds (equity and subordinated debt) when their activities do not generate sufficient profits”. HRE has been in receipt of restructuring aid from the Federal Republic of Germany and is awaiting a final ruling on the compatibility of such aid.
Depfa will make a decision regarding the payment of coupons on its other subordinated Tier 1 instruments, Depfa Funding II LP (XS0178243332) and Depfa Funding III LP (DE000A0E5U85), closer to their scheduled distribution payment dates on 30 October 2010 and 8 June 2010 respectively. Nevertheless, in this context Depfa does not expect that any such coupon payments will be made in 2010.
Depfa is not permitted to pay coupons owing to an insufficiency of adjusted distributable reserves as calculated from the latest available audited annual accounts of the company.
In addition, the company considers servicing these instruments would conflict with the EU Commission’s rules for banks subject to a restructuring aid investigation. In its Communication on restructuring aid to financial institutions of July 2009 the Commission sets out that “banks should not use state aid to remunerate own funds (equity and subordinated debt) when their activities do not generate sufficient profits”. HRE has been in receipt of restructuring aid from the Federal Republic of Germany and is awaiting a final ruling on the compatibility of such aid.
Depfa will make a decision regarding the payment of coupons on its other subordinated Tier 1 instruments, Depfa Funding II LP (XS0178243332) and Depfa Funding III LP (DE000A0E5U85), closer to their scheduled distribution payment dates on 30 October 2010 and 8 June 2010 respectively. Nevertheless, in this context Depfa does not expect that any such coupon payments will be made in 2010.
