The nationalisation of Hypo Real Estate, Germany's second largest property financier, is the 'only option', according to Timo Tschammler, managing director of International Investment at global real estate adviser DTZ.
The nationalisation of Hypo Real Estate, Germany's second largest property financier, is the 'only option', according to Timo Tschammler, managing director of International Investment at global real estate adviser DTZ.
'If the German government did not step in and Hypo Real Estate collapsed, it would represent the most significant financial institution to fail since Lehman Brothers,' he said.
Tschammler was commenting after the German parliamentarians approved key elements of a bill to allow the Federal Government to nationalise the bank, despite opposition from the JC Flowers private equity group, the largest shareholder in Hypo Real Estate.
'Regrettably, voting to expropriate the shareholders and nationalise Hypo Real Estate has become inevitable given the bank's financial position and its strong interwoven influence within the German financial markets and the economy as a whole,' Tschammler said.
'Although the decision to expropriate shareholders may seem like it would damage Germany's reputation amongst investors, the move is not a permanent one, and the bank will be privatised once sustained stability has been achieved. This sends out strong signals to the financial community as a whole, and highlights the government's commitment to securing Germany’s economic future.'
