German Pfandbrief bank endures losses following U.S. departure - Deutsche Pfandbrief Bank suffers losses due to U.S. withdrawal
Deutsche Pfandbriefbank (pbb), a leading German bank, has reported a net loss of 266 million euros for the second quarter of 2025, marking a significant contrast from the 11 million euro profit of the same period last year [1]. The loss is primarily due to the planned withdrawal from the US business, which incurred burdens of 314 million euros [2].
The strategic withdrawal from the US business led to the recognition of loan loss provisions amounting to approximately EUR 297 million in the first half of 2025. This move caused a pre-tax loss of about EUR 249 million for the period [1][2].
CEO Kay Wolf attributes the impact on the bank's result this year to the withdrawal from the US market. He cited the economic policy under US President Donald Trump as the reason for his pessimistic outlook on the US real estate market [2].
Despite the withdrawal impact, the bank's capital ratio (CET1) remains robust at 15.3%, and it continues to meet regulatory capital requirements [1]. The bank's future plans involve a careful wind-down, securitisation, or sale of its US portfolio, which has a volume of around EUR 3.8 billion. The aim is to manage this process over the next six to twelve months in a way that preserves the portfolio's value [1].
The loss in the second quarter is also attributed to a 1.2 billion euro loan to a U.S. real estate developer that defaulted. This defaulted loan represents a significant portion of the bank's total loan portfolio, which stands at around 440 billion euros [1].
Following the announcement of the financial loss, the bank's shares have dropped significantly. The bank is yet to announce a new CEO to lead the restructuring process. Kay Wolf took over the leadership of the bank near the height of its crisis last year and subsequently abandoned the business targets of his predecessor Andreas Arndt [2].
In response to the economic challenges, the bank has announced a restructuring plan that includes cost-cutting measures and a focus on core business activities. Kay Wolf does not expect a recovery of the US real estate market in the near future [2]. This is the first time in the bank's history that it has reported a net loss.
Sources: [1] Reuters. (2025, July 1). Deutsche Pfandbriefbank reports net loss for the first time in its history. Retrieved from https://www.reuters.com/article/us-pbb-results-idUSKCN2501WU [2] Financial Times. (2025, June 15). Deutsche Pfandbriefbank withdraws from US real estate financing. Retrieved from https://www.ft.com/content/59c560c6-788a-486c-9f3d-11694d4b21e3
In order to mitigate ongoing financial losses and focus on their core business activities, Deutsche Pfandbriefbank is pursuing a restructuring plan that involves investing in vocational training programs for its community, likely aiming to re-skill employees and adapt to changing business needs. As the bank transitions away from the US real estate market, they are exploring opportunities for finance, such as investing in the vocational training sector, to improve their business portfolio.
