Down for the Count at Hbv Group

Week #3 Case Analysis Case #8 Down for the front at HVB Group Indiana Institute of Technology MBA7000 Business Policy and Strategy kinfolk 21, 2006 By Bob Locke Context In 2003, HBV Group was the second largest bevel in Germany, and tenth in the world with assets of more than than $730 billion. HBVs nerve centre holding is Bayerische Hypo-und Vereinsbank in Germany and Bank Austria, the largest in Austria. HVB has 8.5 million retail customers and is Europes largest mortgage lender. It is the leading lender to the Mittelstand?the small and midsize companies that embodiment the backbone of the German parsimoniousness. The problem is that the company is seeing mounting losses, tumbling credit ratings, and a share price less(prenominal) that half of what it was in 2002. The reason is that HBV group has a massive $460 billion loan portfolio unspoiled of bad debts. In the azoic to mid-1990s one of HBVs banks made real estate loans worth billions of dollars peculiarly in the former East Germany. But with the Eastern Germany economy failing to achieve the expected results, and taking the West Germany with it, the replete(p) German economy went into a recession, and HBV was stuck with billions of dollars in bad debt. a great deal of that has been paid off, but HBV still carries the rest on its sleep sheet.

In addition, HBV also made loans to some large, now dash German companies, as well as many of the Mittelstand companies that cease up filling bankruptcy. In the end, HBV was forced to make overbold bad-debt provisions of $1.25 billion in the third quarter of 2002. This is more than double its operating profit of $545 million. Normally HBV would be open to use its investments to help boost its share price, but receivable to the erosion of the value of those investments, and having to use up capital to net income off the bad debt, it does not look good for HBV. With a market capitalization of only 8.92 billion, this could make HBV an easy putsch target. Dieter Rampl took over as CEO, the HBV group... If you want to get a full essay, order it on our website: Orderessay

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