Hypo Real Estate Holding AG, the German lender taken over by the government, reported a full-year loss as it set aside more money for risky loans and on costs for its government-led bailout.
The company, which owns Dublin-based Depfa Bank, narrowed losses in 2009 to €2.24 billion from €5.46 billion a year earlier, but said it doesn't expect to return to profit before 2012.
Hypo Real Estate, which is wholly owned by the German government's Soffin bank-rescue fund, said yesterday that chief executive Axel Wieandt has stepped down with immediate effect because of "differing views" with the bank's owner. Management board member and chief risk officer Manuela Better has taken over his responsibilities until further notice.
Mr Wieandt and Soffin couldn't agree on management pay as the lender's government-owner "had to treat a publicly sensible topic such as manager bonuses with special care", supervisory board chairman Bernd Thiemann said at a press conference in Munich today.
Mr Wieandt and Soffin also disagreed on strategic questions, such as primarily using capital to pay back government aid or to grow the business, he said.
Soffin got full ownership of Hypo Real Estate in 2009 following a squeeze-out that forced minority investors, including US investor J Christopher Flowers, to sell their remaining shares.
Hypo Real Estate set aside €2.09 billion in provisions for doubtful loans in 2009, compared with €1.66 billion a year earlier, and paid €741 million for guarantees in connection with liquidity support provided by Soffin and the German government, it said. The lender reduced its balance sheet by 14
per cent to €359.7 billion last year.
Hypo Real Estate reorganised its business to focus on real estate and public-sector financing under a new core bank named pbb Deutsche Pfandbriefbank. The lender almost collapsed in 2008 when its Depfa Bank unit, which it agreed to acquire in July 2007 for €5.3 billion, failed to secure short-term funding after the bankruptcy of Lehman Brothers Holdings froze credit markets.
The company needed a total of €102 billion in credit lines and debt guarantees from government and financial institutions to save it from collapse. In NOvember, Hypo Real Estate received €3 billion euros in additional capital from Soffin, on top of the €3 billion it got earlier. T
he lender may need a further €4 billion in capital, chief financial officer Alexander von Uslar said at today's press conference.
Hypo Real Estate's core capital ratio, a measure of financial strength, was 9.4 per cent at the end of 2009. Including the losses of 2009, the gauge was around 7.8 per cent, the company said.
The lender said in January that it was applying to transfer as much as €210 billion of assets into a so-called bad bank. The transfer will take place in the second half of the year if approval is given, it said.
Bloomberg