German bank HRE cuts losses sharply in 2010
State-owned German bank Hypo Real Estate (HRE) said Thursday that it cut its losses sharply last year but acknowledged that it still faces problems.
Munich-based HRE reported a pre-tax loss of 859 million euros ($1.2 billion) in 2010, a marked improvement from the loss of more than 2.2 billion euros a year earlier, a statement said.
Moreover the fortunes of the bank, which was nationalised in 2009 amid the global financial crisis, improved as last year progressed.
In the fourth quarter of 2010 it made a pre-tax profit of 268 million euros, compared with a loss of 442 million in the same period the previous year.
"With the realignment process largely completed, the group now has a clear structure," the statement quoted HRE chief executive Manuela Better as saying.
The bank has significantly reduced its assets and transferred risks into a so-called bad bank.
But it might have to book exceptional charges of "up to 1.59 billion euros" in the process, which could see it end 2011 with a loss as well, the bank warned.
"Without such a payment, the management board anticipates posting a profit for 2011," the statement said.
HRE is also under close scrutiny from the European Commission, which could require further restructuring of the bank in exchange for approval of billions of euros in public aid during the financial crisis.
On Wednesday, HRE said it had returned all the public guarantees placed at its disposal, which totaled 124 billion euros.
Berlin has also injected 10 billion euros directly into the property lender and municipal financing specialist, notably as it was being nationalised in 2009.
© 2011 AFP