German Hypo Real Estate gets guarantees worth 10 bln euros
The German state-owned bank Hypo Real Estate has activated another 10 billion euros (12 billion dollars) in public loan guarantees owing to fresh tension on financial markets, a German fund said on Friday.
The decision to request guarantees provided by the German financial markets stabilisation fund SoFFin was taken "because of the current situation on financial markets," a SoFFin statement said.
Hypo RE can draw on a total of 103.5 billion euros in state guarantees to obtain financing on interbank markets at reasonable rates but has become dependent on such support.
The specialist in property lending and municipal financing is in the midst of a complex restructuring programme and a failure of that process "would have huge consequences for the German economy, a statement quoted SoFFin president Hannes Rehm as saying.
Hypo RE is highly exposed to potential losses from the purchases of bonds issued by troubled eurozone countries like Greece, Ireland, Italy, Portugal and Spain.
© 2010 AFP