German Lender HRE Granted 15 Billion Euros in State Guarantees | Business| Economy and finance news from a German perspective | DW | 31.10.2008
  1. Inhalt
  2. Navigation
  3. Weitere Inhalte
  4. Metanavigation
  5. Suche
  6. Choose from 30 Languages


German Lender HRE Granted 15 Billion Euros in State Guarantees

Hypo Real Estate (HRE), one of Germany's most destabilized financial institutions, has been granted a 15-billion-euro ($19.3-billion) state loan from the German government's Financial Markets Stabilization Fund (SoFFin).

A man walks past the post box of Hypo Real Estate in Munich

Deposit here: HRE hopes to have the state guarantees in place by mid-November

The troubled German property lender, caught in a liquidity crunch which worsened after US investment bank Lehman Brothers declared bankruptcy in September, will use the SoFFin guarantee to cover a bank bond that it will use as collateral to get cash from the central Bundesbank and maintain its current operations.

The liquidity guarantee is expected to be in place by mid-November, a HRE statement said.

While other regional banks in Germany have said they are considering requesting help from the government's rescue plan for the banking sector, including BayernLB which has applied for 5.4 billion euros ($6.8 billion) in aid, HRE is the first private German financial institution to take advantage of the rescue package.

The German government revealed the rescue package, which includes 400 billion euros in loan guarantees and up to 80 billion euros in capital injections, earlier this month.

HRE bailout the biggest in German history

The logo of the Hypo Real Estate bank hangs over the entrance to the bank's headquarters in Munich.

HRE was just one of a number of high-profile casualties

HRE is already the subject of a rescue plan worked out by the government, the German central bank and a financing consortium that's worth 50 billion euros. The short-term guarantee unveiled late on Thursday will keep HRE going until the full sum is available.

The real-estate lender became the subject of the biggest financial rescue in German history earlier this month after its inability to refinance the debts of its Depfa subsidiary dragged it into the global financial turmoil.

The German-Irish subsidiary, which specializes in financing of public works projects, was acquired by HRE in October 2007.

DW recommends