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FINANCIAL CRISIS

Another €2.08 billion pumped into HRE bank

Germany will pump another €2.08 billion ($2.79 billion) into the troubled bank Hypo Real Estate, the financial market stabilisation fund SoFFin said Wednesday in a statement.

Another €2.08 billion pumped into HRE bank
Photo: DPA

The latest cash injection will help HRE establish a “bad bank,” to which it plans to transfer €210 billion in risk positions and non-strategic assets, the statement said.

On September 10, SoFFin announced that it would extend an additional €40 billion in loan guarantees to HRE, which had already received €103.5 billion in such guarantees. HRE has now also received a total of €9.95 billion in cash from SoFFin, the statement added.

HRE, which last year narrowly avoided bankruptcy before being nationalised, was the only German bank to fail Europe-wide stress tests in July.

The specialist in property lending and municipal financing has become dependent on state guarantees to refinance its debt on financial markets at affordable interest rates.

HRE began creating a “bad bank” in July and SoFFin said Wednesday it has decided to move €191 billion worth of assets to it by September 30, if the European Commission grants its approval.

HRE collapsed in late 2008 amid a global crisis owing to investment mistakes made by its German-Irish subsidiary Depfa. The German bank is highly exposed to potential losses from the purchases of bonds issued by eurozone countries like Greece, Ireland, Italy, Portugal and Spain.

It was nationalised last year following a long flirtation with bankruptcy. There was widespread public outrage earlier this month after it became known HRE reportedly paid out some €25 million in bonuses to about 1,400 employees for their contribution to the bank’s overhaul over the last year.

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.

AFP/The Local/mry

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MUNICH

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.

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