Emphasis on the popping. Worth listening to this as you scroll down the below table, compiled by a clearly nostalgic Laurent Fransolet of Barclays Capital…
Alternative title: Moralrisikodämmerung.*
From a Fitch report just out on Wednesday — a twist on the big contagion story of German banking exposure to a Greek default: Read more
Hypo Real Estate — the nationalised German bank and the only one to have failed this summer’s stress tests — passed a(nother) milestone earlier this month.
It transferred assets worth a nominal €173bn to FMS Wertmanagement (FMSW) — the big bad bank set up by the German state earlier this year specifically to take on non-strategic assets and ‘risk positions’ from Hypo. The plan is for the government-guaranteed FMSW to eventually be wound down over the course of 10 years. Read more
CreditSights has created a sort of EU bank stressometer.
In their words, it seeks to “exploit” the additional disclosure on sovereign risk published in the CEBS-administered European bank stress tests. And while it’s very fun to play around with (yes, FT Alphaville is easily amused) it won’t do much to help alleviate still lingering questions surrounding certain missing exposure to Greece — specifically within the German banks. Read more
Germany’s Hypo Real Estate has failed the European-wide stress test of 91 banks, Bloomberg reports, citing two people familiar with the test results. Hypo, which was bailed out by the Bundesbank in 2008 and is understood to have significant Greek bond holdings, is probably the only German bank to have failed the assessment, they said. Official results are due out on July 23.
Europe’s banks are slowly fessing up to the size of their Greek exposure.
First up have been the French. Read more
The chief executive of Hypo Real Estate says that a German government plan to enforce a controversial “squeeze-out” of minority shareholders next week is the only option for the troubled bank. Axel Wieandt said the move, which will deny shareholders the chance to recover further value from the lender after its near-collapse, was in HRE’s “best interests”. Stakes of shareholders including US buyout group JC Flowers were heavily diluted when the government put €3bn into HRE, giving it 90%. Investors are being offered €1.30 for each share, compared with €1.39 in a previous tender offer.
By James Wilson in Frankfurt
Germany’s government on Thursday launched its first takeover offer for a bank stricken by the financial crisis, saying it wanted to acquire all of Hypo Real Estate through an offer to shareholders. Read more
Hypo Real Estate, the troubled German commercial property lender rescued for a second time by the German government two months ago, is to cut more than 40% of its workforce and retreat from some business areas. Staff numbers would fall from 1,800 to 1,000 in the next three years – some two-thirds of the cuts outside Germany, HRE said at the weekend. At the same time, HRE warned that business conditions had declined in the current quarter and “significant extra burdens” were expected in its Q4 results.
Hypo Real Estate has become the first private sector group to ask for help from Germany’s €500bn financial sector bail-out fund, saying it needed €15bn of liquidity and may seek fresh capital. The request comes less than a month after HRE had to be saved by a €50bn rescue package provided by the government, the Bundesbank and a consortium of German banks
Pfandbrief literally translates to “collateral letters” in German. We think. It always reminds us of Pfannkuchen (pancakes) though.
Regardless of its literal meaning, the word’s been in the news more than usual recently, thanks to the bailout of Hypo Real Estate. Read more
Germany said Sunday it would guarantee all private German bank accounts – currently worth €568bn – in an emergency move to prevent panic withdrawals amid fears about the spreading financial crisis. Angela Merkel, chancellor, said at an unscheduled press conference Sunday that the government wanted “to tell people their savings are safe”. The scheme would cover existing accounts and others which savers might open. The government also said late Sunday that Germany’s commercial banks had agreed to inject an extra €15bn of liquidity into Hypo Real Estate, the ailing mortgage and public sector lender, raising the bail-out agreed last week to €50bn, Europe’s largest since the start of the financial crisis. The original rescue attempt foundered after it emerged at the weekend that the full extent of Hypo’s funding gap had not been disclosed. Berlin’s move – which followed Ireland’s controversial action last week to guarantee the liabilities of six of its banks – will see the abolition of its current protection scheme, which guarantees 90% of all bank deposits but only up to €20,000 per account.
BNP Paribas, the French bank, will take control of the remaining assets of Fortis after the Belgian government was forced to find a buyer following the shock Dutch nationalisation on Friday of its part of the troubled Belgo-Dutch banking and insurance group, reports the FT. The all-share deal, announced Sunday night by the Belgian government, is set to make BNP the biggest bank in the eurozone by deposits and will over time make Belgium and Luxembourg shareholders in the French bank. BNP will buy 75% of Fortis Bank Belgium from the government for €8.25bn ($11.3bn) in stock, and purchase the Belgian insurance operations, Bloomberg reported Monday. The Belgian government will keep a blocking minority of 25% in Fortis Bank and its subprime and related assets will be moved into a special vehicle, added the FT. There were fears Friday that the Dutch nationalisation would cause a fresh rout in shareholder confidence unless a solution was found by Monday. In a second weekend of tumult for Belgian banks, Dexia, which was bailed out by France, Belgium and Luxembourg last week, was forced to state that its credit links to Hypo Real Estate, the stricken German company, would have ”a very limited impact” on the group’s solvency.
Germany’s government and financial regulators on Sunday agreed a second bail-out package for Hypo Real Estate after the abrupt failure of a first attempt to rescue the property lender. A collapse of HRE – which, with a €400bn ($550bn) balance sheet, is one of Europe’s biggest commercial property lenders – would shake Europe. The original rescue package for HRE broke down at the weekend after a consortium of banks that pledged last week to support HRE with extra liquidity learnt its funding needs were far greater than the €35bn first announced. The move forced officials and bankers into talks for a second successive Sunday, in efforts to agree a rescue before markets open Monday. Under the new deal, a consortium of banks will contribute €50bn in aid, up from the earlier €35bn, said officials. But, the German government said it would not raise its credit guarantee from the €25.6bn detailed in the first scheme. HRE gained emergency liquidity lines from banks and the German Bundesbank because it could not get enough short-term, unsecured finance to support Depfa, its Ireland-based public sector lending arm. Lex says HRE “did much to contribute to its current predicament”, including acquiring Depfa last year.
It looks like it is going to be another manic Monday for the London market. The FTSE 100 is currently expected to open around 160 points lower (see CityIndex box above) and that follows another weekend of bank bailouts, rescues and generalised financial melt-down.
The German authorities are still battling to try and save Hypo Real Estate from collapse after a consortium of banks that pledged last week to support the bank with extra liquidity pulled out over the weekend. Remember – HPE is one of Europe’s biggest commercial property lenders and has a €400bn balance sheet. Read more
Germany’s €35bn rescue package for Hypo Real Estate, one of the crop of banking groups given emergency aid this week, was on Thursday night approved by Brussels under EU rules governing emergency state aid. The European Commission said that the loan guarantees designed to cover Hypo’s re-financing needs until April 2009 were compliant with EU rules on so-called “rescue aid”. Under the rules, rescue aid can last for up to six months. However, if assistance is needed beyond that point, a separate restructuring aid package must be submitted. This must aim to restore the ailing company or institution to viability. The Commission, however, stressed that its approval had “no bearing” on whether any future measures taken by the German authorities to support a restructuring would also be approved.
Germany’s financial sector was in turmoil Monday after banks, the ECB and the government agreed the emergency rescue of Hypo Real Estate, one of the country’s biggest lenders, to solve a €50bn ($72bn) liquidity crisis. HRE shares plunged more than 70% and other banking stocks nosedived after the intervention. HRE, one of Europe’s biggest commercial property and public sector lenders, was handed a €35bn liquidity lifeline by other German private sector banks, the Bundesbank and the ECB. The lender is also selling €15bn of assets to cover its liquidity shortfall. The rescue is likely to lead to a sale of assets from HRE’s €400bn balance sheet. Peer Steinbrück, Germany’s finance minister, said HRE’s remaining businesses would be placed in a special purpose vehicle for an orderly wind-down. But people close to HRE rejected the suggestion. The government and a consortium of German banks will underwrite €35bn of credit guarantees for HRE, with the banks standing for a 60% share of an initial €14bn guarantee. The government will provide the remainder of the first-loss piece and a further €21bn guarantee, meaning the state’s exposure could rise to more than €26bn. The rescue was organised after HRE was unable to refinance short-term borrowing within Depfa, its Dublin-based subsidiary that lends to the public sector.
JC Flowers is ready to pursue more opportunities to buy assets in the German financial sector, the US buyout group said after it led a successful a bid to take a substantial stake in Hypo Real Estate, the property lender. HRE investors have tendered at least 24.13% of the company’s shares to the JC Flowers-led consortium, marking one of the biggest private equity incursions into a group in Germany’s benchmark Dax 30 index. Renate Krümmer, who heads JC Flowers in Germany, said that as well as looking at other assets in Germany, JC Flowers would support investments by HRE, whether through acquisitions or buying portfolios from other lenders.
The €1.1bn offer from JC Flowers for almost a quarter of Hypo Real Estate undervalues the German property finance group, according to its management and board, which has decided not to recommend the offer to shareholders. HRE said the intrinsic value of its shares was “significantly higher” than the €22.50 offered by the US buy-out firm, whose offer for a stake in the Dax-30 listed company was revealed last week. But HRE did not urge shareholders to reject the offer, which it continued to welcome in principle. Munich-based HRE was on Tuesday trying to placate shareholders at its annual meeting after a sharp fall in the value of shares this year. The company surprised investors by announcing subprime-related losses in January, sending shares down 35%, and some shareholders want an inquiry into the company’s conduct. Germany’s financial services regulator is also investigating HRE’s disclosure.
At last, Christopher Flowers has found a European financial house that wants to play private equity — Germany’s Hypo Real Estate. News leaked out on Wednesday, seemingly via Reuters, that JC Flowers was set to take a 25 per cent stake in Hypo, which is reckoned to be Germany’s second largest commercial property lender.
That triggered a statement from the German lender, saying it welcomed a plan that involved Flowers orchestrating a consortium that includes Shinsei Bank of private equity investor Grove International tendering for 24.9 per cent of Hypo at €22.50 per share. That implies an outlay of €1.12bn for the Flowers bunch. Read more
Hypo Real Estate on Monday agreed to buy Depfa Bank for €5.7bn ($7.9bn) in cash and shares in Germany’s biggest domestic financial services merger since insurer Allianz bought Dresdner Bank in 2001. The agreed deal would bring together one of Germany’s biggest property lenders and the leading lender to the public sector. The combined group will have a market value of about €10bn. Depfa, which will continue to operate under its own brand, is registered in Ireland but remains listed in Germany.