|
HypoV calls in auditors
|
 |
March 25, 1999: 10:57 a.m. ET
Bank says shareholders may be compensated after report on $2B loss
|
LONDON (CNNfn) - HypoVereinsbank confirmed plans Thursday to compensate investors if an independent auditor finds they were misled when the bank was formed last year.
Germany's second-largest bank has been at the center of a bitter battle between executives since the merger of Munich-based rivals Hypo Bank and Bayerische Vereinsbank last September.
Vereinsbank shareholders believe they overpaid for their stake in the bank after 3.5 billion marks ($1.96 billion) in overvalued Hypo Bank real-estate assets in eastern Germany were written off just after the banks merged.
The bank's supervisory board voted to appoint an independent auditor to investigate the allegations at the bank's annual financial meeting Thursday. "If the special auditor says that in fact the merger report was falsified, then consequences must be drawn," said Martin Huefner, the bank's chief economist.
Federal prosecutors raided bank offices last week as part of an investigation into allegations of fraud and improper accounting in the real-estate department.
"We have to work through these burdens and it makes absolutely no difference which bank was responsible for them. It is now one bank and we must now work through these burdens together," said Chief Executive Albrecht Schmidt.
The bank declined to detail how investors would be compensated or when the investigation would be completed. Analysts expect a report at the annual shareholders' meeting on May 9.
Schmidt's tone at the meeting contrasted sharply with his previous blasts at former Hypo staff over the real-estate losses which have beset the bank.
Klaus Goette, a former Hypo executive who chaired the merged bank's supervisory board, announced his resignation last week and Eberhard Martini, a supervisory board member, may soon follow, say analysts.
The announcement calmed investor concerns after the bank announced a 14 percent drop in operating profits to 2.467 billion marks.
Bayerische shares rose 0.40 cents to 56.80 euros in Frankfurt.
The slide in profit was blamed on the corporate finance unit, which caused risk provisions to climb to 3.245 billion marks from 2.711 billion a year earlier. Schmidt said 1999 profits would beat last year's figures and said the merger would generate net returns in 2000. 
-- from staff and wire reports
|
|
|
|
|
|
Hypo-Vereinsbank
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
