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MUNICH-According to numerous reports, Hypo Real Estate Holding’s investors have voted to follow-through with the German government’s proposed nationalization of the lender. The ‘yea’ vote is an affirmation that the lender will take the 3-billion-euro capital infusion, essentially turning the bank into a state-run entity.

The German government originally gave Hypo $135.5 billion in guarantees, which seemed to do little good for the drowning bank, after which the proposed take-over–initially suggested in January–came under more serious consideration. The idea was that Berlin would take an 8.7% stake, buying the lender’s outstanding shares, while Soffin–the German government’s financial market stabilization fund–expressed a plan to offer for 91.3% of Hypo’s shares, which would have translated at the time to a $390-million transaction.

The storm clouds gathered after Hypo’s first quarter numbers came in reporting a pre-tax loss of $540.5 million for Q1. As reported by GlobeSt.com in early May, Hypo Real Estate’s total portfolio declined from $558.7 billion of assets at year-end 2008 to $547.3 billion at the end of Q1. This set the stage for the government-led takeover.

Even now, however, reports say that the bank does not believe Berlin’s capital infusion will be enough to cover its write-downs from problem loans, as it anticipates future negative gains on 2009′s horizon, say reports. Germany has not nationalized a bank since the 1930s.

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