The Hypo Real Estate Holding AG is a

holding company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...

based in

Munich Munich ( ; german: München ; bar, Minga ) is the capital and most populous city of the German state of Bavaria. With a population of 1,558,395 inhabitants as of 31 July 2020, it is the third-largest city in Germany, after Berlin and ...

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...

which comprises a number of

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...

financing

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

s. The company's activities span three sectors of the real estate market:

commercial property Commercial property, also called commercial real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. Commercial property includes office ...

infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...

and

public finance Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achiev ...

, and

capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...

s and

asset management Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...

. Hypo Real Estate is the second largest commercial property lender in Germany. The bank originated in 2003 from the

financing business of

HypoVereinsbank UniCredit Bank AG, better known under its brand name HypoVereinsbank (HVB), is the fifth-largest of the German financial institutions, ranked according to its total assets, and the fourth-largest bank in Germany according to the number of its e ...

. It employs about 2,000 people and was one of the 30 members of the DAX

stock market index In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance. Two of th ...

of the largest German companies between December 2005 and December 2008, before the shares were demoted to the

MDAX The MDAX is a stock index which lists German companies trading on the Frankfurt Stock Exchange. The index is calculated by Deutsche Börse. Until 2021 included the 60 Prime Standard shares from sectors that rank immediately below (in value of m ...

. Its shares were further demoted to the

SDAX The SDAX (German abbreviation for ''Small-Cap-deutsche Aktienindex'') is a stock market index composed of 70 small and medium-sized companies in Germany. These so-called ' small caps' rank directly below the MDAX (mid-cap) shares in terms of or ...

in September 2009. In 2007 it acquired public finance company Depfa Bank. The company remains a legal entity as a wholly owned

subsidiary A subsidiary, subsidiary company or daughter company is a company owned or controlled by another company, which is called the parent company or holding company. Two or more subsidiaries that either belong to the same parent company or having a ...

of the Hypo Real Estate Group. The firm received a

bailout A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global sys ...

from the

Deutsche Bundesbank The Deutsche Bundesbank (), literally "German Federal Bank", is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks (ESCB). Due to its strength and former size, the Bundesbank is the most ...

and other German banks in October 2008 in the midst of the

financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of ...

, before approving a complete

nationalization Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...

a year later.

Financial difficulties

Crisis summits

Hypo Real Estate encountered financial difficulties during the

, principally due to the heavy debt burden of its Depfa Bank

. On 29 September 2008,

Finance Minister of Germany The Minister of Finance of Germany (german: Finanzminister) is the head of the Federal Ministry of Finance and a member of the Federal Cabinet. State Secretaries for Finance of the German Empire (1880–1918) * Adolf Heinrich Wilhelm Schol ...

Peer Steinbrück announced that a

€ The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists o ...

35 billion

line of credit A line of credit is a credit facility extended by a bank or other financial institution to a government, business or individual customer that enables the customer to draw on the facility when the customer needs funds. A line of credit takes s ...

would be extended to Hypo Real Estate from the

Government of Germany The Federal Cabinet or Federal Government (german: link=no, Bundeskabinett or ') is the chief executive body of the Federal Republic of Germany. It consists of the Federal Chancellor and cabinet ministers. The fundamentals of the cabinet's or ...

and a

consortium A consortium (plural: consortia) is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources ...

of German banks. After the first crisis summit, the

supervisory board In corporate governance, a governance board also known as council of delegates are chosen by the stockholders of a company to promote their interests through the governance of the company and to hire and fire the board of directors. In civil s ...

members independent from and unaffiliated to JC Flowers and Grove International Partners LLP resigned from the office. As successors, Michael Endres (chairman), Bernd Knobloch, Edgar Meister, Sigmar Mosdorf, Hans Jörg Vetter, Bernhard Walter and Manfred Zaß were appointed to the board. The deal fell apart on 4 October 2008 after the banking consortium involved pulled out. A second proposed bailout was agreed on 6 October, with German banks to contribute €30 billion and the

€20 billion to a credit line. After the second crisis, summit some politicians demanded that HRE's top management resign, among them Federal Minister of Finance Peer Steinbrück who stated that he had been kept in the dark and that it was "unthinkable" to keep dealing with them, especially after they had used lawyers against the government to attempt to evade responsibilities. CEO Georg Funke subsequently stepped down, replaced by Axel Wieandt on 31 October 2008.

Further guarantees

Via several steps, Hypo Real Estate was granted further framework guarantees by the German Financial Markets Stabilisation Fund (

SoFFin The SoFFin (Sonderfonds Finanzmarktstabilisierung - Special Financial Market Stabilization Funds) is a program of the German government with the purpose to stabilize and restore confidence in the financial system. It was created in the middle of th ...

) in February 2009, taking its total state funding to €52 billion.

SoFFin takeover offer

On 17 April 2009, SoFFin tendered an offer to take over Hypo Real Estate by buying and creating shares that would raise its equity stake to 90%. On 24 April 2009 the HRE governing boards recommended that shareholders approve the offer by the rescue agency. By that date, government support for the company had reached €102 billion. Under a law passed in March, the government could force the sale if shareholders reject it. Meanwhile, the German parliament formed a committee to investigate the HRE bailout. Opposition parties from the left and right spurred creation of the committee, while the governing centrist coalition abstained.

Nationalisation

With the German state (via SoFFin) already owning 90% of HRE, an

extraordinary general meeting An extraordinary general meeting, commonly abbreviated as EGM, is a meeting of members of an organisation, shareholders of a company, or employees of an official body that occurs at an irregular time.' The term is usually used where the group wou ...

on 5 October 2009 approved a €1.30 per share squeeze out of the remaining private shareholders, including J.C. Flowers (which a year earlier had taken a 25% stake at €22.50 per share). The decision resulted in the complete

of the firm within a year of it having been a DAX constituent.

Subsidiaries

* Hypo Real Estate Bank International * Hypo Real Estate Bank * Hypo Public Finance Bank * Hypo Pfandbrief Bank International * Depfa Bank * DEPFA Deutsche Pfandbriefbank

References

External links

*
DEPFA Bank
* {{Authority control Banks of Germany Banks established in 2003 Real estate companies established in 2003 Companies formerly listed on the Frankfurt Stock Exchange 2003 establishments in Germany Government-owned banks