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HRE bonus payments a 'scandal,' taxpayers' group says

The Local · 20 Sep 2010, 09:27

Published: 20 Sep 2010 09:02 GMT+02:00
Updated: 20 Sep 2010 09:27 GMT+02:00

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The more than €140 billion in state guarantees received by the bank should have been made available to taxpayers, BdSt vice president Reiner Holznagel told Handelsblatt Online.

The bank, which narrowly avoided bankruptcy last year before being taking over by the state, has not managed to get back on its feet or afford the bonus payments, he said.

“The bank leaders and responsible political institutions should put on the emergency brakes immediately and save what’s left to be saved,” Holznagel told the paper. “In the future there can be no voluntary bonus payments – we’re talking about a state-run company here.”

The bank must understand that the old structures which led to the financial crisis are no longer valid, he said.

HRE has reportedly paid out some €25 million in bonuses to about 1,400 employees for their contribution to the bank’s overhaul over the last year.

"Some 1,400 staff - but not the executive board - received a one-off payment based on the contribution of the employee to restructuring, stabilising and re-orientating the corporation," HRE said over the weekend.

Meanwhile the banking sector’s stabilisation fund, SoFFin, has reviewed the bonuses, finding no violations against current regulations.

But politicians across party lines have expressed outrage at the special payments because Hypo Real Estate showed losses of some €2.2 billion in 2009 and received some €40 billion in state aid just a few days ago.

Story continues below…

HRE collapsed in late 2008 amid a global crisis owing to investment mistakes made by its German-Irish subsidiary Depfa.

The specialist in property lending and municipal financing was the only German bank to fail Europe-wide stress tests in July.


The Local (news@thelocal.de)

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