FRANKFURT Aug 14 German banker Georg Funke
faces the possibility of criminal charges over the 2008 collapse
of Hypo Real Estate, his lawyer said on Thursday.
German prosecutors have submitted documents that the court
must now review before deciding whether to pursue Funke, who ran
the bank until 2008, just before it required a government
"Charges have been filed," the lawyer, Wolfgang Kreuzer,
told Reuters. Funke denies any wrongdoing and will seek an
acquittal if the process results in a trial, Kreuzer said.
Earlier this week, Munich prosecutors also sought charges
against Deutsche Bank co-CEO Juergen Fitschen and
several former executives at the bank in connection with the
long-running Kirch bankruptcy case.
Other high-profile German cases have targeted former
executives at HSH Nordbank and Landesbank
Baden-Württemberg (LBBW). So far, however, such
efforts to prosecute financial executives in Germany have
resulted in only one conviction in 2010, that of Stefan
Ortseifen, former head of bank IKB, for misleading
HRE was the country's largest property lender when it
collapsed in one of the most dramatic European episodes of the
As early as 2008, prosecutors began investigating suspicions
of insider trading, market manipulation, breach of trust and
falsification of accounts.
Kreuzer said only a small number of the suspicions had
resulted in a request for charges, but said he had not yet seen
the prosecution documents.
A spokesman for the prosecutor declined to comment but said
the investigation against eight management board members, which
include Funke, had concluded. The court declined to comment.
Germany nationalised the stricken real estate lender in the
aftermath of the Lehman Bros bankruptcy for fear a total
collapse would set off a chain reaction. Hypo Real Estate
received a 10 billion euro capital injection as well as 145
billion euros in liquidity guarantees.
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.
HRE had been preparing to sell Depfa to U.S. investors but
in a surprise move in May, Germany's bank bailout fund Soffin
said taxpayers would be better served if it wound down the unit
itself. It overruled a recommendation by the HRE board, which
had advocated the sale.
Separately on Thursday, HRE said it had mandated U.S. bank
Citigroup to advise it on possible solutions for PBB,
which could include a sale or an initial public offering.
(Reporting by Joern Poltz; writing by Thomas Atkins; editing by
Arno Schuetze and Tom Pfeiffer)