Irish Subsidiary Brings Down German Bank, Hypo Real Estate

An Irish subsidiary, DEPFA (aka Hypo Public Finance) has caused the downfall of German bank, Hypo Real Estate.  They were bailed out last year by the German government (at least once) and today I heard they are being nationalised.  Congratulations or sympathies go out to the German taxpayers who just became exclusive stockholders.

Why the heck is this appearing in my IT blog?  I used to an employee of Hypo Real Estate.  Back in 2003, Hypovereinsbank (HVB)  spun off its real estate operations as a private company called the Hypo Real Estate Group.  One of the subsidiaries of that was called Hypo International and had its headquarters in Dublin with around 8 branch offices globally and somewhere around 500 employees – I’m basing that on active user count, not on the shareholders reports which used to make be belly-laugh.  In 2003, the company had over 2 times the assets of the largest native bank in Ireland.  Amazing when you consider we had 35 employees in Dublin.  The company did grow over the following 2 years that I was there to 17 sites (including DR) from New York to Tokyo and many more employees.

Typically of a bank, we had more systems than you can shake a stick at.  That also included some mad-expensive loan risk calculations system designed/deployed by a UK based company.  Funnily enough, they had also deployed it in Anglo Irish Bank, another bank to go bust and be nationalised because of a bad property loan book!

Muggins here was responsible for designing and managing the MS IT infrastructure across Hypo International.  My team of 2 others looked after 170 servers (including DR for half of the sites) and did 3rd level desktop support.  We probably had around 2 hours of non-project work a day thanks to us adopting the principles of Dynamic Systems Initiative and Optimised Infrastructure.  We built according to best practices, to be agile and with as much automation as possible in the network.  Implementing SMS 2003 and Microsoft Operations Manager 2007 changed our lives.  That meant we spent most of our time either working on business projects or doing research, e.g. everything we did was developed first in a lab and then deployed into production, e.g. we were using ADS to deploy servers in the lab and Virtual Server 2005 RC before we put them into production and I built up DSACLS scripts for our AD administrative delegation model in the lab before running them in production.  Our IT department of 15 ran things very nicely from a central point.  Some of the branch offices had no IT, some did and some did but they were more of a hindrance than help, e.g. political nightmares, “slopey shoulders” or spending more time in the pub than in the office.

We could see the endemic problems in the company very early on.  Myself and a guy called Dec (a whiz Lotus Notes guru … poor chap 😉 ), went over to Germany to set up a branch office.  It was funny because the directors spent more time there than in Dublin; Dublin was only the HQ for tax reasons – this was a German bank with mainly German directors.  We had defined hardware standards for everything and in every branch to keep things simple, e.g. 2 laptop models and 2 desktop models, certain server models/specs for every role – all HP.  That meant my job to run it all would be easy.  Munich decided that wouldn’t do.  You see Munich is the home of Siemens, a German IT company.  Fujitsu Siemens makes computer hardware.  The Munich IT guys decided they would only have FS hardware.  I wasn’t having any of it.  We forced them to get local pricing for HP gear.  [Rotten Smells] They then gave us a B.S. story that there were no HP resellers in Munich. Sure they don’t!?!? [/Rotten Smells]  Directors got involved and they were allowed to buy FS hardware which they promptly cocked up.  Their FS servers had onboard SCSI controllers that didn’t support Windows Server 2003 – our standard server operating system that we were deploying in September 2003.  After 9 days of hard labour, me and Dec brought he system alive for a Monday morning start.  100 staff walked in to find PC’s running, applications installed, email working and their data in place.  There was a champagne launch in the mid morning – and the lazy local f***er who sat surfing the net all day long was thanked for doing all the work, not us.  He’d claimed responsibility for it!!!  He continued that sort of behaviour after that – taking credit for the good things and trying to blame others for his mistakes.

Back in Dublin we saw how things would be.  Our compliance officer had to educate us according to IFSRA (finance regulators) rules so everyone was brought in for an hour long class in small groups.  The short story was that:

• We could not accept presents or bribes from anyone
• If we saw anything that was illegal we had an obligation to whistle blow
• Any whistle blowers would be fired

Hah!  Our Infernal (Internal) Audit was laughable.  They spent more time investigating my team and the helpdesk than doing their job.  I’d deployed security systems and audit tracking on everything.  Nothing happened on that network that I didn’t know about.  Anyone who stepped out of line heard from me immediately.  Infernal Audit should have focused on a particular department called Capital Markets and their operators … and themselves.  For example, if I went to Munich to do some work my hotel budget was something like €75/night which got me into an awful hotel.  Strangely, when Infernal Audit went they stayed elsewhere where the rooms were over €200/night.  Our directors offices were an interesting sight coming up to Christmas – packed full of gifts from all sorts.  What happened to “no presents”?

Capital Markets was funny.  The director in charge of it was a buddy of the group CEO.  I was told that he’d tried to do the capital markets thing in HVB before the spin off but it didn’t work out.  They did the same again in Hypo International but it still didn’t work out.

In August 2005, the board announced some changes.  Hypo International was to be merged into a sister company.  The Dublin office was to be spun off as another company called Hypo Public Finance. This would be the third attempt by the CEO’s buddy to do his own thing.  I guess the logic was “third time lucky”.  Part of the corporate change was:

• All Irish staff were to be made redundant
• All of IT was to be moved from Dublin to Stuttgart by the following April including all of the servers
• Staff could apply for a number of junior jobs to be “set up” in the new Dublin company
• There might be openings in Stuttgart but only for fluent German speakers

Political cronies (e.g. a sniffing red nosed tosser we called Hip Flask who’d come in late & hung over and return from the toilets with an even redder nose, sniffing and all perky *ahem*) all became directors and their stooges all became managers.  What happened immediately was that all senior staff were let go, including me.  In my exit interview I told them that “I would be available for contract work” and that “they would never find staff who could move my network to Germany”.

For some reason they invited all current and past staff to the Christmas Party that year.  I went along.  The third-time-lucky-hopeful director visited every table.  We’d (IT) chosen our table to stay away from everyone else so we were the last ones he’d visit.  I was off my face when he sat down beside me.  I told him he’d made a strategic mistake.  I also told him his company would sink.  I think history will show that I was right.

Not long after I was gone a team of consultants from a German firm was flown in.  That cost a fortune.  At one point 35 of them were trying to do the job of 15.  Nothing had moved by the deadline of the following April.  It’s not like the network was a mess – it was in perfect order but it was done with the latest and best solutions and a level of automation that most don’t ever see.  They couldn’t figure it out.  Eventually they tried a migration to Dell hardware and that was a disaster.  I later heard that management considered calling me to see if I’d do some contract work.  From what I understand, they now have an Irish IT services company looking after the IT systems.  Again, that’s gotta be costing them a fortune.  That one is funny.  In 2005 I did a talk for Microsoft on MOM 2005 to a group of resellers.  One of them used to work with me and was asking loads of questions because he didn’t know the product.  A week later he was presenting at a session as an “expert” in MOM 2005.  He’s the senior “techie” in that IT Irish services company.

In 2007 I was in the IFSC in a coffee shop near the office of the company.  I was then doing a 2 week SMS job for a different company.  I’d get in early and get some coffee while reading the paper.  The new director of IT in Hypo saw me.  She came over to say “hi”.  I was pleasant.  Her: “It’s so hard to find good Windows administrators”.  Me: “It definitely is” with a Cheshire Cat grin on my face.

Hypo Real Estate went on to buy another bank called DEPFA and merged it in with Hypo Public Finance.  They provided loans to governments and huge property developers for hundreds of millions or even billions of dollars.  They’d fund that by trading on the stock market, buying/selling loan books and taking short term loans from other banks.  There was no retail operation to leverage.  When things went sour last year then DEPFA was immediately hit and it nearly bankrupted Hypo Real Estate.  This is an operation with huge amounts of assets whose value were plummeting.  The German government had to bail them out at least once and now is being forced into nationalising them.

I pinged a few of my workmates this morning when I heard the news on the radio.  To say we all shared a laugh would be an understatement.  They had a really good thing going with us and they treated us like dirt.  I hope their directors are bankrupted and investigated up the wazoo.

EDIT #1

I used to have a really good laugh at the end of my time there when I saw stockholder reports.  350 employees in Hypo International.  My arse there were 350!!!  The "Last Logon" attribute in AD said there were 800+.  Who would I trust more – a bunch of disgraced directors or a computer system that keeps a track of everything?