2010 was a dismal year for the New Zealand branch of Deutsche Bank after exposure to the Yellow Pages Group restructuring. The KPMG Financial Institutions Performance Survey issued last week shows that Deutsche ranked at the bottom out of 10 New Zealand branch banks on key measures, including a $53 million loss for the financial year, a 162 percent fall from the previous year’s profit and a negative 37 percent return on equity.
Local Chief Executive Brett Shepheard declined to comment on the deterioration specifically, but in a written statement to www.stuff.co.nz said that “the 2010 result was effected by a loan loss provision from a legacy leverage loan portfolio.”
Last December 40 banks holding Yellow Pages Group’s debt were expected to vote on a restructure of YPG’s reported debt mountain of 1.4 billion for the June 2010 financial year. The banks loaned nearly $1.5 billion to Unitas Capital, a Hong Kong-based private equity group, and a Canadian teachers pension fund to help fund the $2.24 billion purchase of Yellow Pages from Telecom in 2007. The debt restructure came after the banks decided against selling Yellow Pages through a sales process run by Goldman Sachs last year, which would have attracted interest from potential buyers ranging from $400 million to $600 million.
The FIPS report also stated that total equity had increased across New Zealand’s banking sector in 2010, “with the exception of Deutsche Bank.”