Berlin mulls partial Hypo Real Estate nationalisation
AFP · 14 Jan 2009, 17:22
Published: 14 Jan 2009 17:22 GMT+01:00
"I can confirm there is some thought in this direction," Otto Berhnardt, CDU (Christian Democratic Union) spokesman for financial affairs, said, adding that a decision could be make quickly.
A total of €50 billion ($66 billion) in cash and another €30 billion in loan guarantees provided to the bank so far appears not to have been enough to get its back on its feet.
On Thursday, Berlin said it would take a stake of 25 percent plus one share in Germany's second biggest bank, Commerzbank, after pumping in another €10 billion.
It was the first time the government had acquired a stake in a private bank since the international financial crisis erupted in mid-2007 and made Berlin the biggest single shareholder in Commerzbank.
HRE, meanwhile, was a front-line casualty when the US market for high-risk, or subprime, mortgages collapsed, putting the global financial system under unprecedented stress.
Berlin has set up a banking sector rescue package that provides up to €80 billion in cash injections and €400 billion in loan guarantees to prevent a collapse of the country's financial sector.
In December, HRE said it would slash its workforce by almost half in three years, part of a series of draconian moves to save it from bankruptcy. HRE and its Irish subsidiary Depfa were caught up in a liquidity crunch that worsened after the US investment bank Lehman Brothers declared bankruptcy in September.
HRE posted a net loss of €3.1 billion in the third quarter of 2008 and said that it expects additional losses in its fourth quarter and annual results.