Capital Injections
November 22, 2008
Hamburg-based HSH Nordbank said it would receive up to 30 billion euros ($37 billion) in guarantees to rescue it from the ongoing global financial crisis from Soffin, a federal government agency which has a 480-billion-euro war chest.
HSH head Dirk Jens said the shareholders, which include the German states of Hamburg and Schleswig-Holstein, would also provide equity to the battered institution that announced weeks ago it was seeking Soffin aid.
Hypo Real Estate (HRE), the first German bank to nearly collapse in September, said it won 20 billion euros in guarantees from Soffin.
HRE said the underpinning from Frankfurt-based Soffin would improve its liquidity and help it refinance debt that falls due up to Jan. 15, 2009.
The Munich-based mortgage lender was rescued by an earlier, 50 billion euro batch of guarantees from the government and other commercial banks.
The other bank needing a bail-out was one of Germany's nine landesbanken, which are run by various state governments.
In deep trouble?
Landesbank Baden-Wuerttemberg (LBBW) is to receive a 5 billion euro capital injection, it announced Friday amid reports that the world financial crisis had forced it deeper into the red.
The LBBW's owner, the state of Baden-Wuerttemberg, is to provide the capital support. Shareholder sources told dpa the bank is likely to run up a 2 billion euro loss in the current year.
In announcing the capital injection, LBBW became the latest German bank to seek out state aid to help it limp through the financial crisis.
Munich-based publicly owned BayernLB was the first landesbank to ask for state assistance, tapping Soffin last month for 5.4 billion euros.
The moves are also likely to add to pressures for consolidation in Germany's state banking sector, in particular between LBBW and BayernLB.
Astounding losses
In October alone, LBBW is estimated to have clocked up an 800-million-euro loss, with the Stuttgart-based bank's loss for the first nine months of the year coming in at 900 million euros.
The capital injection helped to boost LBBW's core capital ratio to 9 percent from 7.3 percent.