Germany rescues teetering bank Hypo Real Estate

September 29th, 2008 - 5:56 pm ICT by IANS  

Berlin, Sep 29 (DPA) Germany’s government and top banks were injecting Monday billions of euros into a troubled mortgage lender, Hypo Real Estate (HRE), as it teetered on the brink of collapse.HRE said in Munich that a consortium of banks has come to its rescue as it faced a refinancing squeeze, extending credit to tide over the problems. Hypo did not name the banks or disclose how much credit it needed.

But sources in Chancellor Angela Merkel’s coalition government said the government was involved and the package might total as much as 35 billion euros ($50 billion), making the HRE case Germany’s worst hit by far in the worldwide financial crisis.

The sources said German Finance Minister Peer Steinbrueck briefed senior political party leaders on the crisis.

HRE had earlier been in urgent talks with German banking regulator BaFin and the Finance Ministry seeking a solution.

Germany’s second-biggest commercial-property lender, a blue chip on the DAX scale of 30 top companies, had fallen victim to speculation by its German-Irish unit Depfa.

Depfa had pursued long-term projects with heavy loans and generally ensured refinancing only at the last minute.

HRE said it had entered into talks with the banks “in response to the extremely challenging conditions on the international money markets following the Lehman collapse and other market disruptions”.

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