FMS Wertmanagement, which is in charge of the porftolio of toxic assets from Hypo Real Estate, said in a statement it booked a net loss of €690 million ($944 million) in the six months to June after taking a charge of €808 million on its holdings of Greek bonds.
"Not considering the writedowns on the Greece portfolio, FMS Wertmanagement would have generated positive income of €118 million from ordinary business activities in the first half of 2011," said chief risk officer, Christian Bluhm.
"We are pleased with the positive development, but we were unable to escape the effects of the international sovereign debt crisis, which intensified dramatically in the first six months - especially the problems in Greece," Bluhm said.
The bad bank's losses are underwritten by the German state, but the €3.9 billion pumped into it last year have practically already been used up, since FMS Wertmanagement booked a loss of €3.0 billion last year.
Thus, if further losses are incurred in the coming months, the state will have to put up more money.
As of June 30, FMS Wertmanagement held Greek government bonds with a nominal value of €7.2 billion, plus a further €1.6 billion in loans and bonds of Greek issuers.
German Chancellor Angela Merkel said Tuesday this weekend's EU summit was an important step but that more would be needed to stem the long-term debt crisis threatening the global economy.
The summit in Brussels will aim to overcome the eurozone sovereign debt crisis, she told reporters in Berlin. But "this debt has been accumulated over years and that is why this cannot be resolved during one summit," she said.
"Next Sunday's EU summit will mark an important step. But more steps will then follow as the aim is to overcome a debt crisis of states" that has built up over decades, she told a news conference.
Such a crisis "cannot be ended with just one summit," but will require "hard work over the long term," she said.
On Sunday "we shall take important and adequate decisions which will be followed by other decisions" in the future, she added.