* State-owned HRE places 22 mln shares in PBB
* Cuts stake in PBB to 3.5 pct from 20 pct
* German govt to hold on to remaining indirect stake
* PBB shares drop 3.4 percent in early trade (Adds government statement, share price)
FRANKFURT, May 16 (Reuters) - Germany has sold most of its remaining stake in Deutsche Pfandbriefbank, 10 years after bailing out the property lender’s former parent Hypo Real Estate (HRE).
State-owned HRE placed around 22 million shares in Pfandbriefbank (PBB) with institutional investors, raising around 287 million euros ($340 million) and cutting its stake in PBB to 3.5 percent from 20 percent.
HRE said a long-term institutional German investor, whom it did not name, snapped up 4.5 percent of PBB’s stock.
Germany bailed out HRE in 2008 and nationalised it in 2009 after the bank was forced to make massive writedowns on its holdings of mortgage-backed securities, which slumped in value after the failure of U.S. investment bank Lehman Brothers.
HRE was required to sell PBB as a condition of European Commission approval of the bailout and nationalisation. It floated it on the stock exchange in 2015 but retained a 20 percent stake.
According to bookrunners, the 22 million PBB shares were placed at 12.95 euros apiece in the accelerated bookbuilding, a 4 percent discount to Tuesday’s closing price of 13.50 euros.
“The proceeds of the stock market flotation and this share placement total around 2.5 billion euros, exceeding the 2.3 billion euros granted to PBB by the FMS (financial market stability fund),” Jutta Doenges, managing director of Germany’s Finance Agency, said in a statement.
“That is a considerable success in the re-privatisation of PBB,” she said.
The government will remain invested in PBB for the medium to long term via HRE’s remaining 3.5 percent stake, the Finance Agency said.
Shares in PBB fell 3.4 percent to 13.04 euros by 0710 GMT on Wednesday, while the German mid-cap index was flat. ($1 = 0.8449 euros) (Reporting by Maria Sheahan Editing by Victoria Bryan and Alexander Smith)