Capital News
Aareal Bank AG: How much Result can it be, please?
Occasionally one finds lines where one pauses, moved. A perfect example is Aareal Bank, whose investor relations pages contain the following statement: “At Aareal Bank, the dialogue with share and debt investors ranks highly.”
Good to know. Because the bank currently has a lot to explain. To put it mildly, the company's administration hasn´t exactly covered itself in glory over the past few months. From the point of view of many shareholders, the takeover bid submitted by financial investors was inadequate and the management did not address these concerns properly, which is why the takeover attempt failed despite its recommendation to accept the offer. According to the Boards, the offer was deemed to be advantageous from a strategic perspective, and the cash consideration of 29 EUR per share was considered to be fair.
Still, on February 4, 2022, the financial investors had to announce that the voluntary public takeover offer for all shares in Aareal Bank AG was not successful. What reaction from management would you have expected now? A mea culpa, something like “the communication didn´t work as planned”, a misunderstanding or even a clear “no one understands us”? Far from it” In Wiesbaden, you don´t stop there. Looking into the future seems to be much more promising anyway. Consequently, the bank informed on the same day about its plans to continue the growth path already expedited in the past financial year, and to exploit available opportunities for attractive new property finance business to an extent even stronger than originally communicated in 2021.
Wow, that was quick. It´s just a pity that the new plan could not be communicated to shareholders during the term of the takeover bid. What would the Boards have recommended to shareholders at the time if they had already known about the improved outlook for the bank?
Allianz SE: Not every Damage can be insured
Occasionally, the bad news is good news because it wasn´t as bad as initially feared. This was also the case with a message from Allianz recently. After all, the market had expected damage concerning the Structured Alpha Funds of up to 6 Bn EUR.
On February 17, Allianz informed that concerning the pending court and governmental proceedings in the U.S. concerning the Structured Alpha Funds it anticipates settlements with major investors in those Funds shortly In anticipation thereof and in light of current discussions with U.S. governmental authorities Allianz decided to book a provision of 3.7 Bn EUR in the financial statements 2021. The provision reduced the 2021 Group net income to 2.8 Bn EUR.
The matter does not end there, and discussions with remaining plaintiffs, the U.S. Department of Justice, and the U.S. Securities and Exchange Commission remain ongoing. Consequently, the total financial impact cannot be reliably estimated at this time, and Allianz expects to incur additional expenses before these matters are finally resolved.
Nevertheless, when things become calculable, they are also easier to manage.
GRENKE AG: Progress towards getting back to normal
The burdens resulting from a dispute with critical shareholders can be massive for companies, but sometimes there are positive effects at the same time. At GRENKE, the allegations made by a critical shareholder do not seem to stand up to scrutiny for the most part. Nevertheless, there are changes to the business model and above all the company´s communication with shareholders and the transparency of business activities have been improved.
Interestingly, BaFin also made a positive contribution to this development with its special audit of GRENKE AG and GRENKE BANK between autumn 2020 and spring 2021. Measures implemented by BaFin include an adjustment of the minimum capital requirements at GRENKE AG from 9 percent to 10.5 percent, while the respective SREP capital surcharge at GRENKE BANK AG was lifted to 11.5 percent (before: 8.5 percent). In addition, the GRENKE launched an extensive organizational development project, addressing a BaFin order that proper rules of procedure be ensured. The SREP capital surcharge is expected to be lifted provided BaFin is satisfied with the results of future tests at GRENKE.
This step completes the intensive audit period following the accusations made by an investor. But that shouldn´t mean that the company can return to business as usual. The share price is no longer moving in highly speculative waters. But it will certainly be some time before shareholders change their cautious approach to the stock.