Troubled German bank HRE trims losses, plans 2011 outlook

13th August 2010, Comments 0 comments

German bank Hypo Real Estate, a poster child for effects of the financial crisis in Europe's biggest economy, said Friday it had trimmed losses and would give a 2011 outlook in the coming months.

HRE still plans to post a loss for 2010 but should be able to estimate 2011 results "towards the end of this year," a statement said.

By that time, the specialist in property lending and municipal financing will have transferred 210 billion euros (270 billion dollars) in risk positions and non-strategic assets to an external entity known as a "bad bank."

HRE had said previously only that it did not expect to make a profit before 2012 at the earliest.

"The year 2010 marks a period of transition, from stabilising and restructuring, to achieving a realigned group structure," the statement quoted chief executive Manuela Better as saying.

"We continue to make good progress," she added.

In the first half of 2010, HRE reported a net loss of 700 million euros, better than its loss of 1.1 billion in the same period a year earlier.

The amount of provisions taken against potential loan losses also fell sharply to 194 million euros from 881 million, but still represents a heavy burden owing to tense real-estate markets.

HRE was the only German bank to fail Europe-wide stress tests last month but the state-owned bank had already said it needed another two billion euros in capital.

So far, HRE has received 7.85 billion euros in cash from the German financial market stabilisation fund SoFFin along with 103.5 billion euros in loan guarantees.

It was nationalised last year following a long flirt with bankruptcy.

HRE got into trouble after the failure of US investment bank Lehman Brothers in September 2008 exacerbated cash-flow problems at HRE's Irish unit Depfa Bank.

© 2010 AFP

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