GERMANY - JC Flowers turns down Government Hypo offer

The rejection and Berlin's determination to gain full control of HRE may push both parties towards a collision course that may see the German state expropriate JC Flower's holding in the mortgage provider.

HRE has received over EUR 100bn in state-backed refinancing guarantees, without which it would have certainly collapsed.

The German government, which already holds a 16.2% stake in the property lender, has given its shareholders until the end of Monday to accept the offer. It could use "squeeze-out" rules to force out JC Flowers and other minority shareholders. This would be the first nationalisation of a German bank since the 1930s.

JC Flowers holds a 14% stake in the bank, making it the largest investor.

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