CHARGES POSSIBLE:THE CHIEF executive of Germany's crisis-hit Hypo Real Estate gave into political pressure and resigned yesterday after the government and banks agreed a €50 billion bailout.
News that Georg Funke was stepping down gave a 4 per cent boost to shares in Hypo, one of Europe's largest commercial lenders.
After claiming his company would escape the worst of the financial crisis, he came under fire for having to write down €390 million in January. However, his position became untenable when it emerged that the bank would need a further €15 billion to survive - causing the original rescue plan to fall apart at the weekend.
With Hypo considered "too big to fail", federal finance minister Peer Steinbrück gritted his teeth and agreed with banks to guarantee the additional amount, rescuing the bank at the last minute on Sunday evening.
After signing off on post-war Germany's biggest corporate bailout, Mr Steinbrück attacked Hypo's "incredible" behaviour and said it would be "inconceivable" for Hypo management to stay on.
He welcomed the resignation as a "correct, necessary" step.
"The management will be replaced by good people from Deutsche Bank and Commerzbank," said Mr Steinbrück. "This will send a signal to the bank's customers of the bank's future viability." The banks that helped rescue the company have nominated as Mr Funke's successor Axel Wieandt, Deutsche Bank's strategy chief.
Mr Funke was considered one of Germany's least visible but highly effective bank managers. It was his decision to purchase Dublin-based Depfa bank last year for €5 billion. Seen as a coup at the time, German observers blame the Dublin subsidiary for the liquidity problems that put the Hypo group at risk.
Economic observers suggested Mr Funke may not be allowed to go quietly. Business lawyer Erich Samson suggested to Handelsblatt newspaper that the departing executive might face breach of trust charges for his actions at Hypo.
"He could face up to 10 years, although it will depend on how the relevant justice judges his actions: did Funke act as a responsible businessman or did he gamble," Mr Samson said.
