Aareal says higher capital ratios could result in special dividend

FRANKFURT, March 29 Sat Mar 29, 2014 8:21am EDT

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FRANKFURT, March 29 (Reuters) - German property lender Aareal Bank may pay shareholders a special dividend because the acquisition of Corealcredit has bolstered its capital, its finance chief said in a Saturday newspaper interview.

Chief Financial Officer Josef Merkens told daily Boersen-Zeitung the lender now has more capital than it needs for its business after the acquisition put its Tier 1 capital ratio at 12.4 percent.

"If we have excess capital in the longer term we will return it to shareholders if we do not need it for our balance sheet and no further acquisitions are planned," he said.

He declined to say how much Aareal could pay out.

Aareal's management will decide whether to pay a special dividend once the lender has repaid the state aid it received during the financial crisis in the form of so-called silent participation.

The company said last month it planned to issue hybrid capital - additional Tier 1 capital, or AT1 - in the second half of the year that would enable it to repay German bank rescue fund Soffin.

In his interview with Boersen-Zeitung, Merkens said Aareal would like to issue the hybrid capital in the second quarter.

He said issuance depended on German authorities issuing new guidance on the tax conditions that would apply to the AT1 instruments.

"That has been taking longer than we expected," he said.

Aareal received 525 million euros ($722 million) in a form of debt-equity hybrid called a "silent participation" at the height of the crisis, of which 300 million has yet to be repaid.

($1 = 0.7271 Euros) (Reporting by Maria Sheahan; Editing by Sophie Hares)

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