There is hope for the investors of the crisis bank Hypo Real Estate (HRE). Since Monday, the HRE bankers, including the former boss Georg Funke, have been tried in Munich in court. Investors are demanding billions in compensation – and could succeed. The institute has duped the investors for half a year, is the judge’s first assessment.
The real estate bank got into trouble more than five years ago. Their Irish subsidiary Depfa had leased long-term loans, but the capital itself was only short-term in the capital market. That went well, as long as the banks lent each other money at any time. But after the bankruptcy of the US investment bank Lehman Brothers no institution trusted the other. The result: The HRE lacked at once 35 billion euros. First the federal government gave auxiliary loans, then nationalized the institute. A disaster for the investors: If the price of the share at the end of 2007 was still 35 euros, the state would pay them only 1.30 euros.
The shareholders therefore accuse HRE today of having informed the institute too late about the problems. As late as August 2007, the real estate bank had confirmed its earnings forecast – there was no talk of any burdens from the crisis on the US mortgage market. It could not be that the bankers knew nothing about it, investors argue. The presiding judge Guido Kotschy said in an initial assessment at the start of the negotiations, the presentation had been “much too optimistic”. The mandatory notification of HRE in mid-January 2009 came way too late. The lawyers of the HRE and the also defendant former CEO Funke rejected Kotschy’s assessment. The bank had communicated all the essential facts.
The process is crucial because it is representative of many. Countless investors have filed lawsuits against HRE in recent years – they all want compensation. Instead of many individual processes, central questions are now to be resolved in a model procedure: 90 investment funds have ceded their claims to the lawyer Christian Wefers. They claim a total of more than one billion euros from HRE. A piquant detail: If the investors are right, it is the German taxpayers who have to pay for the charges. After all, the last owner of the meanwhile settled bank was the state.