The Deal
Sunday, November 22, 
6:12 am

German gov't ponders nationalization of Hypo Real Estate

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Would snatching a mortgage and public-sector bank from its shareholders benefit the German public? The German government is currently struggling with just that constitutional question as it frets over the best way to prop up the credit crisis-beaten Hypo Real Estate Holding AG.

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If the Financial Times Deutschland is to be believed, Berlin would like to completely swallow the lender and has offered to buy out 25% shareholder JC Flowers LLC for €2 per share. But the American financial investor won't leave so easily -- the paper says it's holding out for €10 per share while Dow Jones says it isn't interested in selling at all. The German government may also be able to get a simple majority by buying up the lender's approved capital and then work with JC Flowers to arrange an acceptable rescue -- all told the bank has already gotten €92 billion ($122 billion) in injections and guarantees since faltering last year.

German politicians have to be doubly careful about taking banks from shareholders, and the prospect has already sparked hefty headlines in Europe's biggest economy -- the action is usually equated with 1930s Germany and the defunct East Germany. - Andrew Bulkeley





Comments

From: Volkmar Ruebel,

what right does the government has to just take
over a business ,any business should the opportunity to correct/find a best practice
solution-similar to the US chapter 11.perhaps in conjunction with the government in the best interest of all share/stake holders.


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