Berlin launches Hypo Real Estate takeover

The German government launched a takeover of troubled Hypo Real Estate bank on Thursday with the aim of stabilising the financial markets as the worst recession since the 1930s sets in.

Berlin launches Hypo Real Estate takeover
Photo: DPA

Berlin, acting through the Financial Markets Stabilisation Fund SoFFin, said it would offer shareholders €1.39 ($1.85 dollars) per share.

“The offer price of €1.39 per HRE share represents a premium of approximately 10 percent to the statutory minimum offer price of €1.26,” a SoFFin statement said.

Stressing that the operation was a “voluntary public takeover offer to the shareholders of Hypo Real Estate,” it said further details would be released “within the next few days after approval by (the stock market regulator) BaFin.”

SoFFin said it intended to acquire 100 percent of the outstanding HRE shares but added that it had set no minimum acceptance level.

The move was aimed at “stabilising the German financial market,” as authorities feared a collapse of HRE could be as damaging as the bankruptcy of US investment bank Lehman Brothers in September.

Germany recently passed a controversial law allowing the state to nationalise HRE, by force if necessary but only as a last resort.

The legislation would enable Berlin to seize the shares of US investor Christopher Flowers, who heads a consortium that owns almost 24 percent of HRE.

The state currently owns 8.7 percent of HRE, a specialist property lender that has received more than €100 billion ($132 billion) in private and public aid so far to keep it afloat.

The bank posted a 2008 net loss of €5.46 billion as it struggled in the fallout from the worst global slump since the 1930s.


German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.