LL investigation reveals Bavarian
investigators scouring closed-end funds.
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The Dresdner acquisition put Commerzbank in
charge of the bank’s 45 percent, non-controlling stake in leasing
and asset management giant KGAL, which despite seeing a 57 percent
business reduction in 2008, still holds a €23 billion asset
book.
Although the portfolio of KGAL’s corporate
solutions division – which comprises its traditional leasing
business – shrunk from €20 billion to €14 billion last year, its
fund and asset management division remains relatively robust. Its
portfolio reduced in size by only €0.7 billion to a value of €9.6
billion, most of which comprises closed-end funds.
This would be all well and good, were it not
for the group’s wholly-owned subsidiary, Commerz Real, which
sprawls over the same big-ticket Immobilien (real estate) leasing
market as KGAL, and also holds a large book of closed-end funds
which, like KGAL’s, are non-traded limited partnership structures,
based mostly on big-ticket assets such as aircraft, ships and
commercial real estate.
Due to volatility in big-ticket asset
valuation, this closed-end fund market has been seen as on the wane
in recent years, giving further impetus to Commerzbank to make a
disposal of its new collection. But some of these funds, linked
with intangible media assets, have attracted a degree of notoriety
that could make the KGAL stake hard to shift indeed.
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By GlobalDataRecently, many of these funds – also held by
lessors LHI and Hannover Leasing – have come under close scrutiny
from Bavaria’s Finanzbehörden (Fiscal Authority), thanks to an
allegedly invalid tax structure.
The funds, issued between 1998 and 2005 with a
total value of around €5.5 billion, were linked to the production
of television and films. Some 100,000 investors are thought to have
become involved, lured by the tax advantage of high initial loss
allocations followed by large income at the end of the investments
as licencing and distribution profits poured in.
But the Finanzbehörden has stated that the
income generated by licensing at the end of the investments should
be spread out over the lifetime of the funds – meaning a
substantial reduction of losses at the beginning of the
investments, and a big potential hit to investors.
With such an ugly tax question raised, it
seems less and less likely that any bank with the funds to buy
Commerzbank’s KGAL stake would be inclined to do so. And with no
buyers likely, even if Commerzbank would like to sell its stake, it
seems highly unlikely that such an interest would be made
public.
Fred Crawley
