Germany’s Hypo Real Estate gets €50bn lifeline

06 October 2008 06:14  [Source: ICIS news]

SINGAPORE (ICIS news)--German banking group Hypo Real Estate Holding AG has secured a crucial €50bn ($68.49bn) credit line from the government and from the private finance sector, the company said in a statement released on Monday, which was the latest in a series of government-led bailouts of financial institutions in Europe.  

 

“This solution ensures that Hypo Real Estate Group is stabilised, will have access to sufficient liquidity even in an ongoing financial crisis and can continue to operate,” said Georg Funke, chief executive officer at Hypo Real Estate.

 

The private finance sector will provide €15bn more of secured credit line to Hypo on top of the €35bn line jointly pledged by the German government and the private finance sector, Hypo said.

 

“This increase became necessary as a result of the intensification of the financial crisis during the past week. The government is providing a guarantee of up to €35bn,” the lender added.

 

The government of Netherlands, meanwhile, had bought international banker and insurer Fortis for €16.8bn in a bid to prevent a repeat of the US market turmoil that caused the collapse of Lehman Brothers and sparked the takeover of financial institutions such as Merrill Lynch and Washington Mutual.

 

The US government’s $700bn financial rescue bill “The Emergency Economic Stabilization Act”, tailored to avert a catastrophic meltdown of the economy, received congressional approval and was signed by President Bush into law on Friday.

 

($1 = €0.73)

 

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By: Bohan Loh
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