German bank HRE to return some loan guarantees: report

12th October 2010, Comments 0 comments

State-owned German bank Hypo Real Estate (HRE) no longer needs 23.5 billion euros (32.5 billion dollars) in loan guarantees and plans to turn them back in soon, a press report said Tuesday.

The guarantees were part of a total 142 billion received by the bank along with 10 billion euros in cash to keep the institution from collapsing during the financial crisis, the business daily Handelsblatt reported.

HRE kept the guarantees in reserve to ensure a smooth transfer of 173 billion euros in risky assets to a so-called "bad bank" earlier this month.

With the new entity now in possession of those assets, the guarantees are no longer needed, the newspaper said, quoting financial sources.

But while HRE has pulled away from the brink of bankruptcy, it still depends on substantial public guarantees to reassure creditors and obtain financing on favourable terms.

© 2010 AFP

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