Nationalised HRE bank gets another €40 billion

Germany's troubled Hypo Real Estate bank, which last year narrowly avoided bankruptcy before being nationalised, will get another €40 billion in state guarantees, a government agency said on Friday.

Nationalised HRE bank gets another €40 billion
Photo: DPA

Germany’s banking sector stabilisation fund SoFFin said it would “increase the volume of guarantees (for Hypo RE) to an amount up to €40 billion”, adding that the additional guarantees would be available to the bank until the end of the year.

SoFFin said the new support should allow Hypo RE to avoid “any liquidity crises,” which Stern magazine reported this weekend could hit the bank as soon as later this month.

The specialist in property lending and municipal financing was the only German bank to fail Europe-wide stress tests in July, and has already received €7.85 billion in cash from SoFFin along with €103.5 billion in loan guarantees.

The bank has become heavily dependent on state guarantees to be able to refinance its debt on the financial markets at affordable interest rates.

Hypo RE began creating in July a “bad bank” to which it plans to transfer €210 billion in risk positions and non-strategic assets.

It is an “extremely complex process and certainly exceptional, given the volume” of assets to be transferred, but its success would mark “a decisive turning point in the restructuring of Hypo RE,” spokesman Hannes Rehm was quoted saying in the SoFFin statement.

Given recent unfavourable interest rate movements, and the possibility of unforeseen risks during the difficult talks on the transfer of assets to the bad bank, it remained possible that Hypo RE could face a liquidity crisis, he added.

Hypo RE collapsed in late 2008 amid a global crisis owing to investment mistakes made by its German-Irish subsidiary Depfa.

Hypo RE is highly exposed to potential losses from the purchases of bonds issued by troubled eurozone countries like Greece, Ireland, Italy, Portugal and Spain.

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

The bank said last month it had trimmed its losses, but declined to say how much it expects to lose this year or to issue a forecast for 2011.

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Four injured as WWII bomb explodes near Munich train station

Four people were injured, one of them seriously, when a World War II bomb exploded at a building site near Munich's main train station on Wednesday, emergency services said.

Smoke rises after the WWII bomb exploded on a building site in Munich.
Smoke rises after the WWII bomb exploded on a building site in Munich. Photo: picture alliance/dpa | Privat

Construction workers had been drilling into the ground when the bomb exploded, a spokesman for the fire department said in a statement.

The blast was heard several kilometres away and scattered debris hundreds of metres, according to local media reports.

Images showed a plume of smoke rising directly next to the train tracks.

Bavaria interior minister Joachim Herrmann told Bild that the whole area was being searched.

Deutsche Bahn suspended its services on the affected lines in the afternoon.

Although trains started up again from 3pm, the rail operator said there would still be delays and cancellations to long-distance and local travel in the Munich area until evening. 

According to the fire service, the explosion happened near a bridge that must be passed by all trains travelling to or from the station.

The exact cause of the explosion is unclear, police said. So far, there are no indications of a criminal act.

WWII bombs are common in Germany

Some 75 years after the war, Germany remains littered with unexploded ordnance, often uncovered during construction work.

READ ALSO: What you need to know about WWII bomb disposals in Germany

However, most bombs are defused by experts before they explode.

Last year, seven World War II bombs were found on the future location of Tesla’s first European factory, just outside Berlin.

Sizeable bombs were also defused in Cologne and Dortmund last year.

In 2017, the discovery of a 1.4-tonne bomb in Frankfurt prompted the evacuation of 65,000 people — the largest such operation since the end of the war in Europe in 1945.