Germany's HRE bank pays millions in bonuses: report
Germany's troubled Hypo Real Estate bank, which last year narrowly avoided bankruptcy before being nationalised, has paid 25 million euros (32.6 million dollars) in executive bonuses, Der Spiegel reported.
The property and municipal funding specialist paid out the bonuses for 2009 after executives threatened legal action, the German weekly said in an article to be published Monday.
HRE board chairman Manuela Better gave the green light to fulfil a promise made by her predecessor, Axel Wieandt, who left suddenly in March after disagreeing with Germany's banking sector stabilisation fund SoFFin over the question of remuneration.
As with all banks in Germany that have benefited from state aid, directors' salaries at HRE were set at a maximum of 500,000 euros per year, Der Spiegel said.
During the 2008 financial crisis HRE collapsed, partly due to major business errors made by its German-Irish subsidiary Depfa, and has only been saved by 100 percent nationalisation and an infusion of 142 billion euros in state guarantees.
HRE was the only German bank to fail Europe-wide stress tests in July, and it has become heavily dependent on state guarantees to be able to refinance its debt on the financial markets at affordable interest rates.
In July it began creating a "bad bank" to which it plans to transfer 210 billion euros in risk positions and non-strategic assets.
© 2010 AFP