Germany’s second-biggest lender Commerzbank has sold its UK loan book to U.S. Wells Fargo & Co. and private equity firm Lone Star Funds to shrink its loan book and reduce risk, reported Yahoo Finance.

Wells Fargo, the largest U.S. home lender, will acquire the £3 billion of “high quality” performing loan assets, while Loan Star will acquire £1.3 billion of non-performing loans.

Commerzbank said yesterday that it had agreed a 3.5 per cent discount on the loan portfolio’s book value.

The details were confirmed by Sascha Klaus, Board Member of Commerzbank's mortgage unit Hypothekenbank Frankfurt - formerly known as Eurohypo - in an interview published on Commerzbank's intranet.

In total, the exposure at default of the bank's Hypothekenbank Frankfurt unit - formerly known as Eurohypo - to commercial real estate is around €56 billion and its exposure to public finance is around €80 billion.

Commerzbank is winding down Hypothekenbank Frankfurt after receiving aid from the German government during the sovereign debt crisis. The government took a 25 per cent stake in the bank in 2009 after a £15.73 billion (€18.2bn) bailout.

Distressed debt and equity investor Lone Star recently boosted its European staff numbers as it looks to buy portfolios of underperforming real estate debt from banks. In 2011 it bought a £900 million portfolio from Lloyds Banking Group at a price sources said represented a discount of up to 40 per cent.

Commerzbank’s UK lending deals have included the Westfield Stratford City shopping centre next to the Olympic stadium in London and Europe's most expensive block of flats, One Hyde Park, near Harrods department store in central London.
The transaction eclipses Lone Star’s 2011 Lloyds deal.