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Deutsche Hypothekenbank Frankfurt AG

ots Ad hoc-Service: Deutsche Hyp Ffm.-Ham. <DE0008076001>Additional Provisioning Required Following Portfolio Realignment at Deutsche Hyp

Frankfurt am Main (ots Ad hoc-Service) -

Ad hoc-announcement edited and sent by DGAP. The sender is solely
responsible for the contents of this announcement.
Additional Provisioning
Required Following Portfolio Realignment at Deutsche Hyp
On 26 July 2000 Deutsche Hypothekenbank Frankfurt-Hamburg AG
disclosed an additional provisioning requirement which, at the time,
was estimated at approximately Euro 200 million.
Dresdner Bank's Group Audit Division had uncovered particular
risks associated with property finance in East Germany.
The bank's loan portfolio has subsequently been screened according
to the risk criteria established by Dresdner Bank Group.
Deutsche Hyp does not envisage any sustained improvement in the
unfavourable development in, and outlook for, the property market in
various East German regions. It is the view of the Board of Managing
Directors of Deutsche Hyp and Mr. Heinz-Jörg Platzek, who will take
charge as its new Chairman on 1 January 2001, that these
circumstances require that the value of the collateral be adjusted,
in line with the valuations applied by Dresdner Bank AG.
These changes in valuation, in conjunction with additional
exposure revealed in the course of the audit, have led to an increase
in additional provisioning requirements from Euro 200 million, as
originally indicated, to Euro 350 million.
Furthermore, Deutsche Hyp will set aside a general loan loss
allowance amounting to Euro 150 million, which is not yet linked to
any specific risks.
With additional provisioning, now at Euro 500 million, in addition
to the Euro 115 million in budgeted provisions, total provisioning
volume for the year 2000 is expected to amount to Euro 615 million.
Mr. Heinz-Jörg Platzek, the new Chairman of the Board of Managing
Directors of Deutsche Hyp, has taken an active role in the valuation
of the portfolio. Following these extensive provisioning measures,
Mr. Platzek believes that there is now a sound basis for Deutsche Hyp
to regain a leading position in property financing, in Germany and
beyond.
Given the excess coverage provided by the mortgage collateral
backing Dresdner Bank's mortgage bond issues, the effect of
revaluation on these issues is neutral.
From today's point of view, Deutsche Hyp expects to achieve a
moderate positive net income, due to the realisation of hidden
reserves and a waiver of claims by Dresdner Bank AG, its parent
company.
As the majority shareholder, Dresdner Bank AG will waive its
entitlement to a distribution of dividends for the 2000 business year
in 2001.
Once the 2000 business year has been completed, a proposal will be
submitted to Deutsche Hyp's corporate bodies for the distribution of
an unchanged dividend of Euro 0.62 per unit share to minority
shareholders.
Board of Managing Directors Deutsche Hyp Deutsche Hypothekenbank
Frankfurt-Hamburg AG
End
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