Munich scandalous bank: billion-dollar dispute over Hypo Real Estate ended

Status: 06/01/2022 12:29 p.m

More than twelve years ago, numerous shareholders sued Hypo Real Estate, which was nationalized in the wake of the financial crisis, for alleged fraud. Now the justice marathon ends with a comparison.

After more than twelve years, the judicial marathon over the billions in lawsuits against the Munich scandal bank Hypo Real Estate (HRE) ends with a partial success for investors. In comparison, the shareholders will receive 190 million euros, as the Federal Finance Agency announced today.

HRE had agreed on this with the lawyer Christian Wefers, who had represented the claims of many investors as a model plaintiff. According to the finance agency, the claims for damages are largely settled, the authority put this at “96 percent of the volume of claims pending against HRE”.

Near collapse in the financial crisis

The almost bankruptcy of Hypo Real Estate was the biggest loss in Germany in the course of the international financial crisis of 2008/09. The federal government had nationalized the real estate bank to prevent insolvency. He put 9.8 billion euros of fresh capital into the money house, which had speculated on the overheated real estate market. Therefore, today the finance agency has custody of HRE, which has not done any business for years.

In the crisis year of 2009, many HRE shareholders filed lawsuits against the bank because they accused it of providing incorrect capital market information. Investors were deceived by several announcements in 2007 and 2008 about the poor financial situation. The Munich Higher Regional Court (OLG) confirmed this in 2014. Last year, however, the Federal Court of Justice (BGH), which evaluated the press releases at the time differently in parts, sent the test case back to the OLG.

However, the BGH did not completely overturn the Munich judgment. The judges in Karlsruhe were also of the opinion that HRE should have issued a so-called ad hoc announcement with bad news a week earlier in January 2008. According to the finance agency, the test case that has now ended was more than 1.4 billion euros – an amount in dispute of around 930 million euros plus the process interest of around 535 million euros that has accrued in the meantime.

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