German 'bad bank' in red due to Greece
The "bad bank" of German state-owned lender Hypo Real Estate said Tuesday that writedowns on its holdings of Greek bonds pushed it deeply into the red in the first six months of this year.
FMS Wertmanagement, which is in charge of the porftolio of toxic assets from Hypo Real Estate, said in a statement it booked a net loss of 690 million euros ($944 million) in the six months to June after taking a charge of 808 million euros on its holdings of Greek bonds.
"Not considering the writedowns on the Greece portfolio, FMS Wertmanagement would have generated positive income of 118 million euros from ordinary business activities in the first half of 2011," said chief risk officer, Christian Bluhm.
"We are pleased with the positive development, but we were unable to escape the effects of the international sovereign debt crisis, which intensified dramatically in the first six months -- especially the problems in Greece," Bluhm said.
The bad bank's losses are underwritten by the German state, but the 3.9 billion euros pumped into it last year have practically already been used up, since FMS Wertmanagement booked a loss of 3.0 billion euros last year.
Thus, if further losses are incurred in the coming months, the state will have to put up more money.
As of June 30, FMS Wertmanagement held Greek government bonds with a nominal value of 7.2 billion euros, plus a further 1.6 billion euros in loans and bonds of Greek issuers.
© 2011 AFP