(New throughout, adds details, background, comment from CEO)
By Arno Schuetze
FRANKFURT, June 3 Manuela Better, chief executive of bailed-out German lender Hypo Real Estate (HRE) , is stepping down after a surprise policy shift of the German government prevented the sale of a unit of the bank.
"Following (bank bailout agency) FMSA's decision not to sell Depfa but to wind it down under the responsibility of FMS Wertmanagement, the option I did not favour, I no longer saw any basis for carrying out the duties of my office," Better said in a statement late on Tuesday.
Germany nationalised HRE after it collapsed in the aftermath of the Lehman Brothers bankruptcy and the government injected 10 billion euros in capital and offered 145 billion euros in liquidity guarantees to the stricken lender.
When approving the bailout, the European Commission ordered HRE to sell its public finance unit Depfa in 2014 and its much larger mortgage lender Deutsche Pfandbriefbank (PBB) in 2015.
Last month, HRE was on the brink of selling Depfa to U.S.-based investor Leucadia and its partner Massachusetts Mutual for 320 million euros ($440 million). .
But in a surprise move, Germany's bank bailout fund Soffin came to the conclusion that taxpayers would be better served if it winds down the unit itself. It overruled a recommendation by the HRE board, which had advocated the sale.
Winding Depfa down slowly over a period of 20 years may limit the bailout bill for taxpayers but carries ongoing risks if markets weaken.
A person familiar with the situation said Better accepted the decision but could not accept that FMSA, the bailout fund's unit tasked with winding down Depfa, is in her eyes delaying that process until year end or even longer. The person said it would also make the sale of PBB much more difficult.
A spokeswoman for FMSA said that the transfer of Depfa is expected to take place in August or September, adding that the decision to wind down the unit would result in a 300 million euro gain for the taxpayer.
Better, a former HypoVereinsbank Unicredit manager, took the helm at Hypo Real Estate in 2010. She also headed PBB and sat on the Depfa board.
Executive Board member Andreas Arndt will, until further notice, coordinate the work of the management board, HRE said in a statement.
Better's predecessor Axel Wieandt had steered the lender through the first two years of the financial crisis but resigned following a row with HRE's public owner over strategy and pay. ($1 = 0.7349 euros) (Reporting by Arno Schuetze; Editing by Thomas Atkins and David Gregorio)