Germany bids to nationalise struggling Hypo Real Estate

Germany's government wants to buy Hypo Real Estate, the crisis-stricken lender, in what would be the country's first bank nationalisation since the 1930s. Soffin, the vehicle set up by the government to rescue banks, yesterday tabled a bid for Hypo, offering €1.39 a share for the bank, a 16 per cent premium to its value at the close of trading on Wednesday.

Hypo Real Estate already depends on government support for survival, having previously sought credit lines and loan guarantees worth more than €100bn (£90bn). But after losing €5.5bn last year, the bank, which has been harder hit by the credit crisis than any other German institution, remains below the minimum solvency levels required by the country's banking regulations.

The move by Soffin follows new laws introduced in Germany last week, which pave the way for bank nationalisations. Hannes Rehm, the chairman of Soffin, said he wanted to "stabilise the financial market", but a nationalisation of Hypo Real Estate will not take place without controversy.

Under German law, Soffin, which already owns a 9 per cent stake in the bank, could effectively force all shareholders to sell up if it is able to secure a majority holding. That could lead to a showdown with the US private equity group JC Flowers, which is the largest shareholder in Hypo Real Estate.

JC Flowers paid €22.50 a share for its holding in the bank a year ago, and has recently suggested that the German government should invest at €3 a share. The investor also warned last week that it would consider its legal options in the wake of the new legislation on banking nationalisation.

Nevertheless, banking experts backed the deal. Thomas Stögner, a Frankfurt-based analyst with Sal Oppenheim, said: "In my eyes, it's a very attractive offer that's more than the fair value of the company, and I'd recommend everyone take it."

Soffin warned that if Hypo Real Estate were to collapse, it "would have substantial, barely quantifiable, consequences for the national and international financial markets".

The bank is one of several major continental European financial services groups struggling to come to terms with problems caused by the credit crisis. ING, the Dutch group that has twice been bailed out by its government, said yesterday that it planned to sell off businesses with an estimated value of €8bn as it attempts to go "back to basics".

ING was caught out, in particular, after expanding into the US, where the retail savings assets it attracted were substantially invested in residential mortgage securities.

PROMOTED VIDEO
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Life and Style
An Internet security expert has warned that voice recognition technology needs to be more secure
techExperts warn hackers could control our homes or spend our money simply by speaking
Extras
indybest
News
peopleBenjamin Netanyahu trolled by group promoting two-state solution
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style