HRE deadline expires
May 5, 2009
A public offer for all outstanding shares of Germany‘s troubled mortgage lender Hypo Real Estate bank expired overnight. The cash offer of 1.39 euros (1.82 dollars) per share for HRE stock by Germany‘s Financial Market Stabilization Fund, SoFFin, ran out at midnight.
SoFFin says it will announce the results on Thursday.
The Federal association of German Banks, BdB, on Tuesday welcomed what it sees as inevitable: a nationalisation of HRE. BdB president Andreas Schmitz told the mass-circulation Bild newspaper that there is no alternative, adding that the government's interference was necessary in this unusual situation in order to protect the banking system as a whole.
As of last Thursday, the German government owned 22.62 percent of the bank. Berlin is aiming for total control and a stake of at least 50 percent.
HRE posts losses
Just hours after the deadline for its shares expired, HRE posted a first quarter loss of 382 million euros (511 million dollars) – not as big as financial experts had expected. "The first quarter of 2009 again posed a major challenge for the group and its employees in market conditions which continued to be difficult," bank chief Axel Wieandt said in a statement.
The federal government has already provided more than 100 billion euros' worth of loans and state guarantees in an effort to keep Hypo Real Estate afloat. The Munich-based bank plays a key role in financing infrastructure and providing credits to local governmental bodies.
The most prominent German victim of the financial crisis
Germany recently passed temporary legislation to nationalize HRE if the voluntary sale that ended on Monday night fails – which would make HRE Germany's first full nationalisation since 1949.
But a major legal battle might be ahead: HRE's biggest shareholder, US private-equity investor Christopher Flowers, has rejected the takeover bid for the battered bank.
While Flowers could be expropriated under the new law, the Flowers company says it will hold on to the stock as it believes the shares are worth more and that it expects to mount a legal challenge to the bank's nationalization.
Flowers, a former Goldman Sachs executive, invested 1.1 billion euros in HRE, only to see it turn worthless in the world financial crash after a main HRE subsidiary, Dublin-based Depfa, was unable to refinance its covered bonds.
db/rm, dpa/afp/ap