The EAA took over a number of risk positions of the former WestLB in 2009/2010, including difficult shipping loans, failed hotel projects and commitments in the then-troubled US real estate market. In 2012, the range of its tasks and its portfolio grew substantially. Thus, the internationally linked WestLB had to be taken off the market without causing any upheaval.
The EAA took up the challenge and has sustainably contributed to overcoming the consequences of the financial crisis. There was no blueprint for a “wind-up agency” when it started: suitable instruments, structures and processes first had to be developed. This is a demanding task that required employees with many years of experience in the banking industry and who were up for a new task, one that did not offer any long-term secured perspectives in a company set up with a going concern.
In order to complete its tasks, the EAA needs more than just expertise in the lending business and securities trading or in refinancing and compliance with all regulatory obligations. It also requires a number of other specialists who bring in-depth knowledge, for instance, of various industrial segments and different regional markets. The positions taken over by the EAA are, after all, distributed in nearly 100 countries and in roughly 60 different currencies.
The highly diversified portfolio also calls for experience in large-scale projects in the energy sector or experts in difficult shipping markets. For the EAA’s credit risk management activities, managers with expertise in asset management or in the private equity sector are an important part of the team. Managing the EAA’s large participation portfolio requires specialists in sales, transfers or the split-up and spin-off of parts of a company.
The legal experts of the EAA also face particular challenges: they must be familiar with both German and international capital market law or with the economic and legal peculiarities of derivative transactions and securitisation structures that may have certain contractual pitfalls. Mathematicians as well as banking economists are necessary for model calculations and risk analyses.
Employees at the EAA must be able to meet new challenges with flexibility and be prepared to take on large areas of responsibility. Currently, 178 employees manage the portfolio with total assets of around EUR 61 billion as at 31 December 2016. As a steering unit, the EAA is supported by two specialist service subsidiaries with a total of just over 400 employees working for the EAA portfolio.
The most important tasks of the EAA’s Managing Board include securing the acquired expertise for the future wind-up activities. Apart from winding up the portfolio, the EAA must continue to lower costs and reduce staff. Placed between these two poles is the challenge of maintaining specialists for the remaining, in part difficult wind-up activities.
Within this context, the EAA’s Managing Board is also exploring privatisation and outsourcing measures. In 2016, the EAA initiated and completed the privatisation of its portfolio management subsidiary EPA. The now signed transfer ensures customised services for the EAA’s portfolio until 2020. With its new owner, EPA employees have new career options in a growing corporate group.
This transfer is being closed after the approval of the supervisory authorities, which is expected in the first half of 2017. The successful privatisation shows that there is a need for expertise gained from winding up a complex portfolio. The EAA Group has established itself as a competence centre for the management and wind-up of diversified international portfolios.