Hypo Real Estate chairman resigns after bailout

10th October 2008, Comments 0 comments

He was the second senior man to leave the bank, under pressure from the German government and commercial banks, which claimed HRE had understated its exposure.

Munich -- Kurt Viermetz, chairman of Hypo Real Estate (HRE), resigned Friday, 12 days after the German government backed a huge and troubled bailout for the struggling mortgage lender.

He was the second senior man to leave the bank, under pressure from the German government and commercial banks, which claimed HRE had understated its exposure. The chief executive of HRE, Georg Funke resigned earlier this week.

HRE announced in Munich the departure of Viermetz, who chaired the HRE supervisory board, a panel that hires the chief executive and sets broad policy. Berlin had demanded both men be removed.

Under a bailout forged on Sept. 28, then re-engineered on Oct. 5 when it proved inadequate, HRE is receiving 50 billion euros (70 billion dollars) in loans from the commercial banks and German central bank.

The sum was secured with a 35-billion-euro federal guarantee and bonds that are normally not accepted as security by the state.

HRE, Germany's first casualty of the current financial crisis, was brought low by a stricken subsidiary, Depfa, which has its head office in Dublin, Ireland and which lends money to municipalities to build roads, railways, airports and other public facilities.

DPA/Expatica

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