Shareholder uprising
October 5, 2009
At an extraordinary Hypo Real Estate (HRE) shareholders' meeting on Monday in Munich, the final buy-out announcement was met with angry protest from about 1,300 shareholders before the squeeze-out was finalized in a vote.
A stakeholder who refused to leave the podium had to be removed, while 50 others stood, chanting for the head of the board of directors, Bernd Thiemann, to leave the gathering. Security forces were called in, who then formed a protective barrier between the podium and the audience.
"We regard the move as a compulsory expropriation," said Daniela Bergdolt of the German Association for Private Investors (DSW). The planned settlement of 1.30 euros per share is a mere "pittance," she argued.
The rebellious shareholders didn't stand a chance, since the government already owns 90 percent of Hypo Real Estate.
HRE chief executive Axel Wieandt told shareholders that only full privatization could save the lender from bankruptcy. There was no other alternative, he said.
HRE set to become fully state-owned
The squeeze-out marks the final step in the first nationalization of a German bank since the republic was founded in 1949.
The government moved to nationalize HRE earlier this year to prevent the bank from collapsing, which, authorities said, would have threatened the entire German banking sector. It had to take direct control after intervening repeatedly to shore up the company with loan guarantees of around 100 billion euros ($146 billion).
In June, the government's financial-sector rescue fund secured 90 percent of HRE when the majority of shareholders accepted an offer that valued the shares at 1.39 euros each.
The German lender also announced on Monday that it needs seven billion euros in fresh cash to cover losses for 2009 and the following years.
That money comes in addition to three billion euros already received and the massive multi-billion euro loan guarantees by the German financial market stabilization fund SoFFin.
HRE will need several years to repay the state aid, Wieandt said. "The group will not be in a position to repay in full before the year 2015."
db/AFP/AP/Reuters/dpa
Editor: Nancy Isenson