annual report - Hypo Real Estate Holding AG

continues to expand despite a very competitive
environ ment impacted by new market entrants and
regulatory changes. In the future, the Bank also
expects to see more PPP opportunities in this
market.
Turkey
DEPFA established a representative office in Istanbul
in the summer of 2007. Turkey is a growing economy
with a young population; therefore, the infrastructure
investment requirements are substantial. At the same
time, central government imposes strict borrowing
and deficit controls under its standby arrangements
with the IMF. During the year, the Bank was mandated
as Lead Arranger for the funding activities of the major
state-owned bank Vakifbank, and more recently, the
Turkish Eximbank.
DEPFA has also been active in cultivating the relationship
with the National Treasury, and the City of Istanbul,
and initiated discussions with the larger cities in the
country, especially with a view to providing rating
advisory services to those entities who have not yet
been rated. As well as developing contacts with major
government related institutions, the Bank is actively
pursuing large infrastructure project financings, particularly
the toll motorways.
The devolution trend is increasing the political and
economic weight of the metropolitan municipalities in
infrastructure investments in Turkey as well, parti -
cularly in urban mass transportation, water supply,
and health, and there is a new PPP law under
discussion to facilitate concessions to develop infrastructure
projects.
United Kingdom
The public finance market in the UK is unique, as
there is a State funded provider of cheap funding to
local authorities (the Public Works Loan Board, or
PWLB). However, by lending to local authorities for
long periods (with commitments of up to 70 years,
albeit with pre-agreed break options), DEPFA has
been able to provide funding at a lower level than the
PWLB.
2007 was only DEPFA's second full year of marketing
directly to the UK public sector, and it was another
strong year of both new lending opportunities and
restructuring existing obligations, both with new and
existing clients. In addition, 2007 saw the strong
emergence of DEPFA as a counterparty for cash rich
local authorities looking to place deposits with well
rated financial institutions.
DEPFA’s business was given a welcome boost in the
final months of the year as the PWLB changed the
rules on rescheduling loans, meaning that new borrowing
by local authorities from the PWLB in the future
would be far less attractive than before. DEPFA expects
good flows of new local authority business in
2008 as a result.
37