Hypo Real Estate CEO resigns

Axel Wienandt, formerly global head of investment at Deutsche Bank, has been named as the new CEO for Hypo Real Estate following Georg Funke’s resignation earlier today. Wienandt will assume his new role on 13 October.

Talk of the German government's 50 bln bail-out of the German bank has been dominant at EXPO REAL. Leading German bankers warned that although the salvage had averted immediate crisis, it was still too soon to say whether the rescue plan would be enough. Walter Klug, managing director of Morgan Stanley Real Estate Investment Germany, said there was a danger of slipping into a 'crisis of trust'. He said the government had sent a clear signal that it was not willing to let a bank collapse, but added: ‘There's been no mention of a measure that may help protect more than just people's savings, like the Irish government's estimated EUR 400 bn rescue package.'

Bernd Knobloch, the former CEO of German property bank Eurohypo, said it was now up to the banks themselves to win back the trust of the market. 'It would be foolish to believe a national fund would solve every problem. We have to get back to long-term thinking, because real estate is a long-term business.'

Knobloch blamed stocks analysts for pushing banks and other companies into short-term thinking aimed solely at increasing profits every single quarter. 'It's the banks that bought into this ideology that are being hit the hardest now.'

HSH Nordbank board member Berhard Visker said that if banks want to regain trust they will have to increase their liquidity and get back to valuing assets more realistically. 'We've seen an enormous amount of volatility in asset values, simply because the market was acting irrationally.'

Knobloch added: ‘We have seen the last of C-grade property being valued at A-grade prices. Those days are over, hopefully for good.’ Visker added that the current dip in values will create a lot of opportunities. 'True assets are not picked up in bull years, but in bearish markets like today's. Knobloch predicted banks would return to the caution of the 1980s and start lending only 60-65% of property values. All three agreed that securitisation would return, but on a much more modest level and in much simpler forms.

'The market wants much more transparency now, so we could even see other countries knocking on Germany's door investment vehicles like the German property bonds. But the key to the recover of the real estate market will be a return to fundamentals. 'Quality, location and environmental performance will be the keys to real values,' Knobloch said.