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COREALCREDIT BANK AG

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Loan portfolio<br />

The total <strong>COREALCREDIT</strong> mortgage loan portfolio amounted to EUR 4.4 billion at the end of 2011<br />

(2010: EUR 4.6 billion). Within the real estate loan portfolio, the proportion represented by the<br />

target business increased, as low-risk and profitable new business was acquired and the<br />

remaining portfolio of problem legacy loans was significantly reduced. The sale of portfolios<br />

comprising a large number of problem loans, which generated higher-than-expected proceeds,<br />

made a significant contribution to this. Although risk provisions recognised increased in individual<br />

cases in 2011, some were released to income through the targeted disposal and restructuring<br />

strategies.<br />

At EUR 3.3 billion at the end of 2011, the capital market portfolio was slightly lower than the<br />

previous year's level of EUR 3.4 billion. The public sector lending portfolio in the amount of<br />

EUR 1.5 billion, which still serves as cover for the remaining public sector Pfandbriefe, is not being<br />

actively pursued. It was not possible to significantly reduce this portfolio in 2011, as there were no<br />

major public sector Pfandbrief maturities. The volume represented by the PIIGS countries<br />

remained unchanged year-on-year at a total of EUR 385.0 million. This figure includes Greek<br />

bonds and bonds drawn on the Greek state with a nominal value of EUR 75.0 million (book value:<br />

EUR 15.0 million) and Italian government bonds with a nominal value of EUR 110.0 million (book<br />

value: EUR 110.0 million).<br />

Refinancing<br />

<strong>COREALCREDIT</strong> had sufficient liquidity throughout 2011. Refinancing activities focused mainly on<br />

Pfandbrief issuances and on time deposits and promissory note loans under the deposit guarantee<br />

scheme. In the generally difficult capital market environment, the fact that the new business<br />

acquired was largely cover pool eligible and could therefore be refinanced with Pfandbriefe again<br />

proved beneficial.<br />

In 2011, the Bank issued mortgage Pfandbriefe to the total value of EUR 461 million (2010: EUR<br />

783 million), exclusively through several private placements. No public issues of Pfandbriefe were<br />

launched during the period. In addition to the take-up of promissory note loans and time deposits<br />

with non-bank institutions, unsecured refinancing in the amount of EUR 442 million was also<br />

raised, mainly through the Bank’s commercial paper programme. The Bank also engaged in open<br />

market transactions with the European Central Bank.<br />

By the end of the first quarter of 2011, <strong>COREALCREDIT</strong> had repaid all bonds guaranteed by the<br />

Sonderfonds Finanzmarktstabilisierung (SoFFin – Financial Market Stabilisation Fund) early,<br />

replacing them with cheaper longer-term refinancing. At the same time, the remaining SoFFin<br />

guarantee funding was repaid in full. EUR 500 million had been granted and drawn down in mid-<br />

2009 during the global financial crisis as a precautionary measure to improve the Bank’s liquidity<br />

situation. The four notes issued had regular maturity dates between June and November 2011.<br />

<strong>COREALCREDIT</strong> was the first German bank to fully repay its SoFFin guarantee notes; unlike<br />

other banks, it did not make use of capital assistance.<br />

The volume of securities and bonds in circulation amounted to EUR 5.8 billion at the end of 2011<br />

(2010: EUR 5.9 billion). Mortgage Pfandbriefe accounted for EUR 2.9 billion of this amount, public<br />

sector Pfandbriefe for EUR 1.3 billion, promissory note loans for EUR 1.3 billion, bearer bonds for<br />

EUR 0.2 billion, and commercial papers for EUR 0.1 billion.<br />

<strong>COREALCREDIT</strong> also uses syndication as a means of refinancing new business, as well as<br />

actively managing the loan portfolio and reducing the size of individual loans. Greater use was<br />

made of syndication in 2011. Overall, the Bank syndicated loan tranches totalling EUR 137.7<br />

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