Wells Fargo and private equity group Lone Store have completed a £4 billion deal to buy Eurohypo, Commerzbank's commercial property-lending arm in the largest sale of property loans by a European bank since 2007.
Eurohypo is one of the most active commercial property lenders in the UK, £4 billion representing the face value of loans taken out. This figure will be split between Wells Fargo for £2.7 billion, mostly in London office and retail properties, and Lone Star for £1.3 billion. Wells Fargo will be taking on Eurohypo's UK staff as part of the deal.
The partnership was able to fend off competition from Barry Sternlicht’s Starwood Capital and other lenders to win the contract.
The sale, which is being managed by Barclays, will place the US lender to the forefront of the UK's commercial sector. According to the Financial Times, Bill Vernon, a vice-president at Wells Fargo, said: "[The deal is our] first meaningful transaction in commercial real estate outside the US. We like the London market and have been looking at it for a long time; this deal was an opportunity to fast-forward what we want to do by five years.”
Mr Vernon added that while the initial focus will be on the UK, the sale will now be used as a platform for the lender to expand into other markets across Europe.
Wells Fargo, the fourth-largest bank in the USA and the country's largest mortgage provider, recently announced that its earnings in the second quarter of 2013 stood at $5.52 billion (£3.66 billion); an increase of 20 per cent compared to this time last year.