Eurohypo, the property and public finance lender, made a pretax loss of €1.41bn (£1.23bn) last year due to the global financial market crisis.
The lender, which is owned by Commerzbank, suffered a €949m (£836m) loss in its public finance and treasury division, a €339 (£298m) loss from commercial real estate and a €67m (£59m) loss from retail banking.
The commercial real estate loss came after a €454m (£400m) writedown of the bank’s US subprime residential portfolio. Eurohypo has now written down 80% of the subprime portfolio.
Provisions for loan losses more than tripled to €858m (£755m), of which most were in commercial real estate. The bank made a net trading loss of €810m (£713m) as a result of valuation losses on total return swaps, valuations on derivatives and ‘burdens’ arising from the takeover of Essen Hyp.
Eurohypo said its focus this year would be ‘reorientation’.
It said that at the end of last year its board launched a strategy project to reposition the real estate business.
The aim of the project, it said, was ‘to better position Eurohypo on the coming market challenges. In this context, Eurohypo will pay particular attention to which kind of real estate financing it will offer in which markets – and in which organisational form it will do so.’
Board spokesman Frank Pörschke said: ‘2009 is set to be a very challenging year. By swiftly implementing the project's findings within the first half of 2009, we aim to ensure the bank's sustainability.’