HypoVereinsbank

Stand-alone bank

In 1998, Bayerische Hypotheken- und Wechsel-Bank (also known as Hypo-Bank) and Bayerische Vereinsbank merged to form Bayerische Hypo- und Vereinsbank Aktiengesellschaft, also known as HypoVereinsbank or HVB. The merger was conceived as a defensive move favored by the Bavarian authorities, against the prospect of a hostile takeover of Bayerische Vereinsbank by Deutsche Bank which had been rumored since 1996.

The new heavyweight expanded its network into Central and Eastern Europe. During the period from 2000 to 2002, HVB completed the integration of Vienna-based Bank Austria Creditanstalt (BA-CA) and created HVB Group. Within that Group, BA-CA was responsible for the CEE countries, and bought, amongst others, the Bulgarian bank Biochim, the Serbian Eksimbanka and the Romanian Banca Comerciala Ion Țiriac.

However, the 1998 merger soon turned into a financial debacle. Hypo-Bank had entered it with a large mortgage legacy and had substantial encumbrances stemming, in particular, from the allocation of mortgage loans to the new federal states. HVB CEO Albrecht Schmidt later estimated the real-estate encumbrances to have cropped up "unexpectedly" to around DM 3.5 billion. This was followed by a bitter dispute between HVB and the former CEO of Hypo-Bank, Eberhard Martini, during the course of which Martini lost his position on HVB's Supervisory Board. The public prosecutor of Munich I also initiated preliminary proceedings against Martini and other management board members of the former Hypo-Bank, which were ended in 2001 against the payment of fines. The fine imposed on Martini in this procedure amounted to DM 700,000.

In March 2003, HVB's property financing subsidiary Hypo Real Estate was spun off and floated on the stock market. A minority share in Bank Austria Creditanstalt was also publicly listed.

Within UniCredit Group

In 2005, an increasingly distressed HVB was taken over by Unicredit. Also in 2005, HVB absorbed Vereins- und Westbank, which had been formed by the 1974 merger of Vereinsbank Hamburg (unrelated to Bayerische Vereinsbank) and Westbank. Vereinsbank Hamburg had been founded in 1856 on the initiative of renowned merchants in Hamburg. Westbank was created in 1943 from a forced merger of several smaller banks in northern Germany. It was initially called "Schleswig-Holsteinische und Westbank", and was renamed "Westbank" in 1968.

In 2006, HVB took over the corporate clients portfolio of Westfalenbank AG, which had been founded in 1921 by leading companies in the Rhineland-Westphalian industrial district on Bochum. There was already a connection between the two institutions since Hypo-Bank had acquired a part of Westfalenbank in 1971.

Also in 2006, HVB sold its overwhelming majority holding in BA-CA to UniCredit for €13 billion, without an auction process. This subsequently led to a number of lawsuits by HVB shareholders. The investment company Activest was sold to a UniCredit fund subsidiary called Pioneer Investments.

In January 2007, UniCredit announced its intention to carry out a squeeze-out of HVB. The price in this respect was established at €38.26 per share. A decision on the squeeze-out was taken at the Shareholders Meeting on 26 June 2007. Following the Shareholders Meeting, over 100 actions to set aside a shareholders' resolution by free HVB shareholders took place; this represents a record for Germany. At the Shareholders Meeting, the Bonn-based lawyer Thomas Heidel was selected as special representative pursuant to § 147 German Stock Corporation Act, who, amongst other things, was to look into possible claims for damages in conjunction with the sale of the Bank Austria shareholding. UniCredit, for its part, lodged an action to set aside a shareholders' resolution in turn. During the subsequent period, the special representative lodged complaints that his work was being obstructed. On 15 September 2008, the squeeze-out adopted by the Shareholders Meeting in June 2007 was entered into the commercial register at the Register of Companies in Munich. As such, all remaining HVB shares were transferred to UniCredit by force of law, and the listing on the stock exchanges was discontinued.

HVB is a member of the Cash Group. As a mixed mortgage bank, it performs banking operations as a universal bank within the meaning of the Mortgage Banking Act and, as a mortgage bank, is also authorised to issue pfandbriefs.

Subsidiaries

Important subsidiaries of UniCredit Bank GmbH are:

Bankhaus Neelmeyer AG, Bremen (private sector bank)

Unicredit Direct Services GmbH, Munich (Call centre)

Controversy

Gustl Mollath case

In the context of the judicial scandal involving Gustl Mollath, UniCredit is named as the legal successor of HypoVereinsbank, which failed to forward an internal audit report on customers' capital transfer to Switzerland to the public prosecutor.

Financing of "junk properties"

From the 1990s, HypoVereinsbank put junk properties throughout Germany on the market and helped the buyers with the financing. The true value of the properties was concealed, while the estate agents were trained and remunerated accordingly. In one case, the aggrieved parties took their case to the Federal Court of Justice of Germany, which ruled that the bank was liable for the agent's transaction.