Competition fears
May 15, 2009
The European Commission has approved the proposed nationalization of Germany's Hypo Real Estate Bank. A Commission spokesman said on Friday the move "does not raise any competition concerns," choosing not to set any conditions on the planned takeover.
Chancellor Angela Merkel's coalition government has provided 102 billion euros (135 billion dollars) to help HRE avoid financial collapse in the wake of the US subprime mortgage crisis.
HRE posted a loss of nearly 5.5 billion euros last year, but the bank's biggest shareholder, US investment fund J.C. Flowers, rejects the government's move to nationalize the financial institution, threatening to take the case to Germany's Constitutional Court.
In the meantime, the German government announced it had increased its ownership of HRE to just under 50 percent, with further plans to raise its stake to 90 percent control of the financial institution.
Berlin's push to tighten its grip on HRE comes ahead of an extraordinary stockholders' meeting later this month.
Meanwhile Munich prosecutors are investigating legal suits filed by two lawyers who claim that Hypo Real Estate delayed filing a petition in insolvency. An HRE spokesman said the case was without substance.
nrt/dpa/Reuters