MANAGEMENT AT troubled lender Hypo Real Estate (HRE) kept the bank’s mounting problems from the supervisory board, according to former Bundesbank president Hans Tietmeyer.

A former member of the non-executive board of Dublin-based Depfa Plc and later HRE, Mr Tietmeyer said the board was informed only at an emergency meeting in September 2008 that a special audit by German regulators had begun eight months earlier.

The emergency meeting took place after the collapse of Lehmann Brothers froze liquidity markets, threatening Depfa and its parent company HRE with collapse.

“If I had heard earlier that a special audit was being carried out, I would have asked more questions,” said Mr Tietmeyer. “I didn’t always feel fully informed and I had the impression that others felt the same way. A board should always be informed in good time about important things.”

The former central banker was the most high-profile witness yet heard by the parliamentary committee into the €102 billion HRE/ Depfa bail-out and nationalisation.

Three months before the general election, the inquiry has turned into a political football. Opposition parties accuse the government of poor oversight, a claim the government rejects.

A former HRE risk manager said yesterday that HRE management ignored inherent problems in the group’s structure.

“The problem was that Hypo was growing so fast and each new bank brought it own systems,” said Stéphane Wolter. “There was no time to consolidate systems and that made it difficult to manage payment flows.”

He examined Depfa’s books after HRE’s takeover in 2007 and warned his superiors immediately that, according to his stress tests, the bank would face a liquidity gap of up to €90 billion if markets seized up for 90 days. His warnings were ignored, he said.

“There is no joy when a risk happens pretty exactly as you predicted it,” he said. “Lehmann wasn’t the cause of Hypo’s troubles, it was just the last nail in the coffin.”