JC Flowers insists on being a part of Hypo’s future

The private equity firm, who along with Grove International Partners and Shinsei Bank invested €1.1bn for a 24% stake in the bank in June last year, said it wants to remain as shareholders for ‘good or bad’. The firm's founder told German lawmakers to seize control of the bank would be an 'extreme step'.

JC Flowers founder Christopher Flowers has insisted his firm wants to remain a shareholder in troubled property lender Hypo Real Estate, despite German government efforts to nationalise the bank.

Speaking before a German parliamentary committee today, Flowers reportedly told politicians that by remaining a key shareholder in the lender, JC Flowers would help save taxpayers money.

“We would remain as shareholders of the company and our fortunes would — either good or bad — would ride with the German state from that point forward,” Flowers said, according to a Reuters report. “We have not been asked whether we would be interested in contributing further capital to Hypo Real Estate. But let me state that that is something we would consider if we were invited.”

JC Flowers, along with real estate fund manager Grove International, bought a 24 percent stake in the bank last June for around €1.1 billion. The consortium offered €22.50 a share for the stake. As of press time, shares in Hypo were trading at €0.89.

Flowers has been battling to retain his firm’s stake after Germany’s coalition government backed plans to seize control of the bank as a last resort. Lawmakers will vote 20 March on a bill that would allow Germany’s first bank nationalisation since the 1930s, Bloomberg reported.

Germany has already made available €102 billion in loans and guarantees to ensure Hypo’s survival.

Flowers told the parliamentary committee that Hypo could not have survived without government assistance. “The government and the people have done the bank a good service. Steps taken were very necessary and appropriate though not unique, being taken by other states around the world,” he said.

However, Flowers warned attempts to seize the bank would be an “extreme step” and something investors would see as “unusual even in these circumstances”.