UPDATE 3-Hypo Real shareholders howl at Berlin's squeeze-out

* Squeeze-out of 1.30 eur/shr was a foregone conclusion

* CEO says no alternative to complete state control

* Won't fully repay liquidity support before 2015-CEO

* Does not expect to return to profit before 2012-CEO (Adds result of vote)

By Peter Maushagen

MUNICH, Oct 5 (Reuters) - Minority shareholders at nationalised German property financier Hypo Real Estate (HRE) HRXG.DE on Monday railed against the government's move to force them to sell their remaining stakes in the stricken bank.

The 1,300 shareholders attending an extraordinary general meeting angrily condemned the downfall of the once blue-chip lender as the state prepared to increase its stake from 90 percent to complete control.

HRE Chairman Bernd Thiemann had to call in a ring of security guards to protect himself from a group of about 50 people who had gathered at the speaker's dais, chanting "Thiemann out."

Outraged investors then hounded the head of German government bank rescue fund Soffin, Hannes Rehm, out of the hall in tumultuous scenes far removed from the usually more staid shareholder meetings.

The squeeze-out of minority shareholders, including U.S. investor J.C. Flowers, for cash compensation of 1.30 euros per share was the only item on the agenda for the meeting, HRE's last in its current form.

The formal vote, passed late on Monday with an approval rate of 94.7 percent, was a foregone conclusion that minority shareholders would have to tender their shares.

"We are here to witness the final act in the drama of HRE," said Daniela Bergdolt of shareholder association DSW.

A FREE HAND

The squeeze-out gives Berlin a free hand to restructure HRE, which became one of Germany's highest profile casualties of the credit crisis requiring some 100 billion euros ($146 billion) in mainly state guarantees to stay alive.

"There was, and is, no realistic alternative to state ownership," HRE Chief Executive Axel Wieandt told shareholders.

Taking complete control of HRE will give Soffin the legal certainty and flexibility it needs for further restructuring before it pumps any more cash into the bank, Wieandt said.

DSW's Bergdolt said she would ask the courts to examine the government's squeeze-out offer of 1.30 euros per share.

"They are assuming that shareholders should be happy with this pittance," she said.

J.C. Flowers was not immediately available for comment but it has also said it would look at possible legal steps against the move.

The bank's shares closed up 2 percent at 1.50 euros.

HRE was a big player in Germany's "Pfandbrief" covered bond market, which is vital and stable source of refinancing to the country's banks, making it too important to go bust.

Its business model, which relied on wholesale funding to finance infrastructure projects and public-sector budgets, ran into trouble when interbank lending dried up in the credit crisis, prompting the state rescue.

The bank's capital needs are still significant. CEO Wieandt estimated it needed 7 billion more to account for past and expected losses, on top of the 3 billion euros that was already agreed to this year.

The recapitalisation would give the group a core capital ratio of at least 10 percent, Wieandt said.

HRE did not expect to return to profit before 2012 and did not expect to be able to fully repay the government's liquidity support before 2015, Wieandt said.

Germany's Frankfurter Allgemeine Zeitung on Monday cited sources close to the European Commission as saying that the planned restructuring of HRE did not go far enough, and that the healthy part of the bank should be shrunk more than planned.

Wieandt declined to comment on the newspaper's report.

Hypo Real Estate aims to shift more than 200 billion euros in risky assets to a "bad bank" as part of its restructuring. ($1 = 0.6840 euro) (Writing by Jonathan Gould; editing by Karen Foster and Carol Bishopric)