“The group will not be in a position to repay the liquidity support facility in full before the year 2015,” Wieandt told an extraordinary meeting of Hypo RE shareholders in Munich, southern Germany.
“The group’s existence as a going concern in the foreseeable future will remain contingent upon the continued availability” of external sources of cash, but could make a profit again by 2012, he added.
Hypo RE needs around €10 billion in fresh cash to cover losses for 2009 and the following years, in addition to €78 billion in loan guarantees already provided by the government, Wieandt said.
The bank has been provided with up to €98 billion in loan guarantees by the German financial market stabilization fund SoFFin.
Hypo RE faces several threats to its survival, including high costs for refinancing and restructuring, a sharp devaluation of its assets and the need to take higher provisions against bad loans.
The specialist in real-estate lending was hammered when US investment bank Lehman Brothers collapsed in September 2008.
Hypo RE was privatised since then by Berlin to prevent a collapse that authorities say would have threatened the entire German banking sector.
The state now owns 90 percent of Hypo RE and shareholders are expected to approve a squeeze-out option that will allow the bank to become fully state owned.
That would mark the final step in the first nationalisation of a German bank since the republic was formed in 1949.
In addition to its real-estate operations, Hypo RE plays a pivotal role in the issuance of “Pfandbriefe,” bonds in which small investors, savings banks and insurance companies have placed large sums.