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Germany

State-rescued bank defends million-euro-bonuses

Hypo Real Estate (HRE), the nationalized lender that received billions of euros in state aid to survive the financial crisis, has defended handing out millions of euros in bonuses to employees. Politicians are outraged.

Hypo Real Estate logo

HRE has received almost 150 billion euros in guarantees

After the German government shelled out massive sums to help HRE fend off financial doom, politicians have lashed out at the bank after it emerged that some 25 million euros ($32.6 million) were paid in bonuses to executives in 2009.

A bank spokesman was quoted on Sunday as defending the bonuses as "merely a fragment" of the amounts given to its employees prior to the crisis.

The spokesman added that "no bonuses larger than 500,000 euro were handed out," which goes against reports made by German magazine Der Spiegel. The magazine had claimed that some of the executives received payments of over one million euros.

The German government took over Hypo Real Estate after the bank nearly went bankrupt during the financial crisis in 2008, booking losses well over two billion euros.

Just last week it became apparent that the lender will need another 40 billion euros in state guarantees, bringing the total government contribution to almost 150 billion euros.

Tax payers made to bleed for 'zombie bank'

Politicians, meanwhile, have reacted with outrage to HRE's announcement and defense of the bonus payments.

A screen shot from the Doom video game

Germany is shelling out for a 'zombie bank' say experts

Frank Schaeffler, a financial expert of the joint-governing Free Democrats, told the online edition of the daily Handelsblatt that it was "unfathomable" that the payments were being made, directing his criticism just as much at the Social Democrat-Christian Democrat coalition which was governing when HRE was rescued.

"The resurrection of this 'zombie bank' should have been managed differently. It is inconceivable that the government didn't ask for such bonus payments to be prohibited as a condition of its bailout," Schaeffler said.

Handelsblatt also cited Gerhard Schick, the Greens party's financial spokesman, as calling bonus payments for 2009, the year HRE received the billions in state aid, "outrageous."

"It is absolutely unacceptable to expect tax payers to shell out millions for banker bonuses," Shick said, adding that "nobody will tolerate such reckless behavior at the expense of the general public."

Author: Gabriel Borrud (Reuters/dpa)
Editor: Andreas Illmer

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