The German government will take an 8.7 percent stake in Hypo Real Estate Holding AG as a first step toward gaining full control of the company, the troubled commercial property lender said on Saturday.
The government’s bank rescue fund will acquire 20 million new shares in the bank for 60 million euros (US$81 million), Hypo Real Estate said in a statement — leaving it with about 8.7 percent of the company.
The company, which also announced on Saturday that it lost 2.57 billion euros in the fourth quarter and 5.46 billion euros over the whole of last year, described the stake as “a first step.”
PHOTO: AFP
It said that “it is a prerequisite for the intended recapitalization of Hypo Real Estate” that the government “gain full control.”
Hypo Real Estate has become the most prominent German victim of the financial crisis.
It ran into trouble last September after its Dublin-based unit Depfa Bank PLC failed to attract short-term funding amid the widening credit crunch.
Since then, the government has shored it up with loan guarantees covering some 87 billion euros.
Officials have argued that the government needs to be able to exert direct influence on the bank after intervening repeatedly with guarantees.
Legislation that would allow the government to take over the bank fully by expropriating shareholders if necessary is currently making its way through parliament.
“With the intended long-term liquidity and capital support, for which we are very grateful, the Federal Republic of Germany ... will provide the basis for the continued existence of Hypo Real Estate Group as a going concern,” CEO Axel Wieandt said.
Also on Saturday, the bank reported huge losses for last year.
It said preliminary figures showed a net loss of 5.46 billion euros, a result impacted by a 2.48 billion euro hit from impairments related to Depfa and “exacerbated by numerous special effects.”
It reported a full-year pre-tax loss of 5.375 billion euros, compared with a profit the previous year of 862 million euros.
Hypo Real Estate had a net loss of 2.57 billion euros in the year’s final quarter, and a pre-tax loss of 2.48 billion euros.
That compared with a pre-tax profit of 5 million euros in the fourth quarter of 2007.
“For at least the next two years we can anticipate a loss situation,” Wieandt said. “We consider that the medium-term strategic prospects are positive.”
The company, which said it had assets totaling 419.7 billion euros as of Dec. 31, did not immediately provide fourth-quarter figures.
The government bank rescue fund, worth up to 500 billion euros, was set up last October.
Its actions have included a capital injection for Commerzbank AG, one of Germany’s biggest private banks, that left the government with a 25 percent stake.
US private equity firm JC Flowers & Co LLC and its shareholders own about 17 percent of Hypo Real Estate, while Grove International Partners LLC and its shareholders own about 6.7 percent.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
RSS