Saturday, March 28, 2009

Germany Buys 8.7% Stake in Hypo Real for EU60 Million

On Bloomberg by Simone Meier:

Hypo Real Estate Holding AG said Germany’s bank rescue fund, Soffin, will acquire 20 million shares valued at 60 million euros ($79.8 million), giving the state a stake of about 8.7 percent in the lender.

New shares must be issued at least at the minimum price, or 3 euros per share, the Munich-based company said in an e-mailed statement today. The lender said it had a full-year loss before taxes of 5.38 billion euros last year after a profit of 862 million euros in 2007. The net loss was 5.5 billion euros, it said in a separate statement.

Hypo Real Estate, which lost 93 percent of its market value over the last 12 months, has already been bailed out by the German government and financial institutions with credit lines and debt guarantees totaling 102 billion euros. The lender almost went bankrupt after its Dublin-based Depfa Bank Plc unit failed to get short-term funding in September amid the credit crunch.

“It is a prerequisite for the intended recapitalization of Hypo Real Estate Group by Soffin that either Soffin or the German government gain full control over Hypo Real Estate Holding,” the Hypo Real statement said. “To this end it is intended to make use of the options that will be provided by the German Financial Markets Stabilization Amendment Act, which is currently being discussed in the legislative process.”

Germany’s upper house, the Bundesrat, will be asked to approve the Hypo Real Estate seizure legislation when it comes before them on April 3, following its passage by the lower house on March 20. The law also imposes a time limit, stipulating that any seizure has to be initiated by the end of June.

The lender’s nationalization would be the first of a German bank since the 1930s.

No comments: