Tuesday, 15 January 2008

Chart Of The Day : Hypo Real Estate

Hypo Real Estate Group is a global leader in commercial real estate financing.

Hypo Real Estate Group is led by Hypo Real Estate Holding AG, a public company with headquarters in Munich, Germany.

Hypo Real Estate Holding AG had its biggest decline ever in Frankfurt trading after the German commercial property lender said pretax profit fell in 2007 and that it will cut its dividend. The shares tumbled as much as 38 percent.

"Of the fourth-quarter losses on its CDOs, 295 million euros were booked in the income statement, it said, while 95 million euros ``related to portfolio-based provisions'' were booked earlier."

"The company reiterated on Nov. 7 that it wasn't involved in retail residential lending and said it therefore has 'no direct subprime exposure.' "

" 'People thought the worst was already known, at least for the members of the DAX,' said Fidel Helmer, head of equity trading at Hauck & Aufhaeuser in Frankfurt. The private bank has the equivalent of $20 billion in assets under management. 'There might be more negative surprises when annual reports are due.' ''

" 'We can't rule it out,' Chief Financial Officer Markus Fell said when asked on a conference call whether there may be further writedowns on CDOs. "

The whole issue about the subprime mess is transparency.
Financial and Commercial institution have not revealed to the market the nasty investment they have made.

They profited of weaknesses and miscalculation that central bankers made in 2003 (by letting interest rates too low for too long that distorted real asset prices and saw an hyperbolic rise in loan lendings).

The "invisible hand" is back and slapping faces of CEOs that felt into incompetence, greed or corruptive behaviour.

The process of normalization has not finished yet , let's just hope that the casualties won't be the honest hard working citizens but instead some investors , lenders or banks.

Source: Bloomberg

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