ANGRY SHAREHOLDERS heckled the board of Hypo Real Estate (HRE) at an extraordinary general meeting (egm) in Munich yesterday that sealed the stricken lender’s nationalisation.
The German government, through its bank nationalisation fund, has bought 47 per cent of the bank’s shares and established a majority at the meeting to push through a nationalisation.
The meeting began in a poisonous mood when chairman Michael Endres announced, amid heavy booing from 1,900 shareholders, the purpose of the egm – to approve a €5.6 billion capital increase, thereby diluting existing shareholdings. When he announced that the entire board had resigned, an angry voice shouted: “Hang them!”
One young woman nursed a sign in the bank’s familiar firm font, reading: “Hypo Fake Estate.”
The anger is not surprising, considering how HRE shares, worth €55 at the start of 2006, are now valued at just €1.50 each.
Chief executive Axel Wieandt, appointed after last September’s meltdown, was heckled as he thanked the federal government for its support.
“The management and supervisory boards ask you in all urgency to approve the capital increase,” he said, adding that the bank already fell short of minimum capital needed under regulatory capital requirements.
“Hypo Real Estate has no realistic alternative to government participation. We would have already had to file for insolvency,” he said.
Since September, the federal government has provided €102 billion in loans and guarantees to the bank after its Dublin subsidiary, Depfa, experienced serious liquidity problems.
Mr Wieandt said that, even when the current capital injection is completed, the bank will require a further €2.96 billion.
He announced that, under state control, the bank would undergo a complete reorganisation. Non-core subsidiaries will be sold, 15 offices will close with a loss of 300 jobs, and the bank will focus on property financing and government lending – financed by covered bonds.
The most prominent shareholder, investor Christopher Flowers, announced he would fight the so-called “squeeze out” to dilute his 20 per cent stake.
“Mr Flowers is keeping his options open,” said the spokesperson.
After months of backroom dealings, the meeting put a human face on the unfolding HRE drama, with one shareholder more angry than the last.
“We invested €160,000 in supposedly safe HRE shares for the future of our disabled daughter,” said 42-year-old Ulrike Struzek.
“Today they’re only worth €8,000. All we want is not to be squeezed out. We want to wait five, 10 years and hope that the shares are worth something again.”
