AMID ANGRY cries of “fraud”, German property lender Hypo Real Estate (HRE) ended a turbulent year yesterday with a state “squeeze-out” of remaining shareholders.
Yesterday’s extraordinary general meeting in Munich sealed the bank’s nationalisation, after it was brought to the verge of collapse last September by its Dublin subsidiary, Depfa.
“For almost a year, the company has only managed to avoid bankruptcy thanks to liquidity aid,” said chief executive Axel Wieandt. One year and €102 billion in state guarantees and loans later, Mr Wieandt said yesterday the bank may require another €10 billion to achieve a 10 per cent core capital ratio.
After months buying shares at €1.50 followed by a capital increase, the Berlin-controlled bank stabilisation fund Soffin had by yesterday secured control of 90 per cent of the bank. That put it in a position to dictate the future terms of the rescue package. It has insisted that its continued support is dependent on other shareholders being squeezed out.
HRE managers have justified the offer price of €1.30 by pointing to reports that suggest the bank is technically worth nothing.
“That doesn’t stop Wieandt paying himself a royal salary,” complained frustrated shareholder Leonhard Steppberger.
Like many at yesterday’s meeting, he refused to sell his shares in the hope that the price would eventually recover, as has been the case at other banks.
The Soffin fund plans to delist the bank on the stock market, restructure it entirely, then return the healthy part to the market. The company has been rebranded “Deutsche Pfandbriefbank”.
HRE managers say they do not expect their institution to return to profit before 2012; it will only be able to pay back liquidity aid worth €102 billion before 2015.
"The state is not the better banker just, for the time being, the better owner," said Hannes Rehm, head of the Soffin agency, to the Handelsblattnewspaper.
Shareholders used their last chance yesterday to hold a spontaneous protest at the front of the meeting hall with signs calling the expropriation “East Germany Light”.
“My handicapped child is completely innocent and is now being expropriated because some negligent bankers did some insecure deals,” said Ulrike Struzek, who invested €160,000 in HRE shares.
Shareholders vowed that yesterday’s meeting is not the end of the squeeze-out: private shareholder organisations have promised to take their case to the courts.
They are demanding more than €1 billion in compensation, claiming they were misled by the former chief executive Georg Funke about the bank’s performance.
