Is nationalization of Real Estate Holding in the offing?

Is the nationalization of Hypo Real Estate Holding AG, Germany imminent? Well, if we listen to the versions of Peer Steinbrueck or the Finance Minister of Germany, it seems to be in the offing and it has also been learnt that the preliminary talks with shareholder J.C. Flowers & Co. LLC failed to deliver any definite outcome.

What is the present standpoint of the Government of Germany hence? Let’s concentrate on what Mr. Steinbrueck said in the interview in Rome. The German minister is there at present to meet officials from the Group of Seven nations. He said, “Whenever it should be necessary, for example concerning the Hypo Real Estate bank, in my eyes the ‘ultima ratio’ might be a nationalization.” “I won’t exclude it.”

Now, if this bizarre incident takes place, Hypo Real will be the first bank in the history of Germany since the 1930s to experience this and it has come to the knowledge also that the German government is quite busy at the present time in drafting a legal amendment to be put to Cabinet on February 18. What is the present condition of Hypo Real Estate Holding AG? Why is there a need of nationalization? The best answer of these questions can be found if we memorize some essential facts.

It was the unusual situation like the failure of the Depfa Bank Plc unit to get short- term funding in September when credit markets seized up that made Hypo Real look for a bailout desperately. A group of investors under the leadership of Flowers, which happens to be the owner of almost a quarter of Hypo Real, is seeking to recoup losses after a 92 percent drop in the share price since then. The demand of Flowers is 10 euros ($12.91) per share while the government has offered the market price.

According to market sources, there is no other way expect the nationalization and the fast approach of the government in this respect can revitalize the real estate market.