It was just after Lehman Brothers went bust. Josef Ackermann, then the chief executive of Deutsche Bank, Germany’s largest financial firm and a major player in the investment banking world, was trying to avert the global panic spreading to his home turf.
Mr. Ackermann called Chancellor Angela Merkel at around midnight on Monday, September 29, 2008, not for a bailout of his own bank but to convince her to rescue the German mortgage lender Hypo Real Estate, or HRE, which had suddenly found itself shut out of capital markets and was sinking fast.
It would become Germany’s costliest bailout of the 2008 financial crisis. Up to today, the German government has invested €19.1 billion, including €7.7 billion in a capital injection, into the failed mortgage lender, which has been split into three parts. While Germany may not have been the country worst affected by the financial crisis, its taxpayers were still forced to cough up tens of billions to keep the system afloat.
Six and a half years later, the final chapter of the drama surrounding the mortgage bank is now set to unfold. The best remaining part of the bank is expected to be privatized or taken public by the end of the year, HRE announced on Tuesday.