10-06-2008, 04:54 PM
Troubled German bank HRE gets 50 billion euros in bailouts
by William Ickes
FRANKFURT, Oct 6, 2008 (AFP) - The troubled German bank Hypo Real Estate got its second bailout in as many weeks, raising the total to 50 billion euros (68 billion dollars) as shock waves from the US-bred international financial crisis rattled deep fault lines in Europe's banking sector.
German Finance Minister Peer Steinbrueck said Monday he would not rule out an increase in a state-backed guarantee for the country's fourth biggest bank, in what is already the biggest financial bailout in the country's history.
It appeared that private banks and insurance companies would shoulder the burden of the latest rescue package, but asked if he could rule out the state raising its initial guarantee for HRE, Steinbrueck told public Deutschlandfunk radio: "I cannot."
The government agreed a week ago to guarantee almost 27 billion euros (36.7 billion dollars) in credit to HRE, which specialises in property financing.
On Sunday, intense talks between German banks and insurance companies resulted in a second 15-billion-euro guarantee for the bank, which had received guaranteed credits worth 35 billion euros one week earlier.
German financial institutions are struggling to keep the bank afloat as problems triggered by the international financial crisis hit banks from Iceland to Greece, with governments buying stakes in Belgian, British and Dutch banks.
HRE hailed on Monday the second public-private bailout, which it said would allow it to keep functioning amidst the ongoing financial crisis.
"We are very thankful for the backing of all those involved," HRE boss Georg Funke said in a statement.
"The solution guarantees the stability of the Hypo Real Estate Group, which will have enough liqudity and will be able to continue functioning even as the financial crisis continues," Funke added.
German Chancellor Angela Merkel warned however that "those who managed their company in an irresponsible way will have to answer for it," and Steinbrueck said it was "inconceivable to be able to continue working with the present management" of HRE.
On Sunday, a turbulent day in Europe's biggest economy, the government had also extended a blanket guarantee for all personal bank deposits to avert panic withdrawals.
The move aimed to shore up confidence amid a spreading global financial crisis, in a country in which failing banks bring up particularly bitter memories of the 1930s Great Depression, which helped the Nazis rise to power.
In a bid to head off a run on banks, Steinbrueck assured German account holders they need not worry about losing a "single euro" in the crisis.
Finance ministry spokesman Torsten Albig told the business daily Handelsblatt that the estimated value of the guaranteed accounts would total 568 billion euros.
The total 50-billion-euro lifeline for stricken HRE was agreed in crisis talks between the government, the Bundesbank central bank, market regulators and the banking sector.
Chancellor Angela Merkel's government had scrambled to reach an accord before Asian markets opened Monday, fearing the ultimate collapse of HRE and heavy selling pressure on all German banking shares.
"With this mutually agreed solution, the institution will be stabilised and with it, Germany strengthened as a place to conduct finance in difficult times," the finance ministry said in a statement after the emergency meeting.
But in morning trading on the Frankfurt stock exchange, HRE shares shed a massive 33.69 percent of their value to 4.98 euros, while the Dax index of leading shares had dropped by 4.22 percent overall.
Berlin's daily Tagesspiegel said the government had had no choice but to cobble together a plan for HRE and ensure bank deposits.
"It did so in the interest of its citizens, the millions of German insurance clients, pensioners and small savings account holders," the centre-left newspaper wrote.
http://www.zawya.com/Story.cfm/sidANA206280101726/Troubled%20German%20bank%20HRE%20gets%2050%20billion
%20euros%20in%20bailouts
![[Image: 10-6-2008_42579_1.gif]](http://geo.tv/10-6-2008/urdu/10-6-2008_42579_1.gif)
http://geo.tv/10-6-2008
by William Ickes
FRANKFURT, Oct 6, 2008 (AFP) - The troubled German bank Hypo Real Estate got its second bailout in as many weeks, raising the total to 50 billion euros (68 billion dollars) as shock waves from the US-bred international financial crisis rattled deep fault lines in Europe's banking sector.
German Finance Minister Peer Steinbrueck said Monday he would not rule out an increase in a state-backed guarantee for the country's fourth biggest bank, in what is already the biggest financial bailout in the country's history.
It appeared that private banks and insurance companies would shoulder the burden of the latest rescue package, but asked if he could rule out the state raising its initial guarantee for HRE, Steinbrueck told public Deutschlandfunk radio: "I cannot."
The government agreed a week ago to guarantee almost 27 billion euros (36.7 billion dollars) in credit to HRE, which specialises in property financing.
On Sunday, intense talks between German banks and insurance companies resulted in a second 15-billion-euro guarantee for the bank, which had received guaranteed credits worth 35 billion euros one week earlier.
German financial institutions are struggling to keep the bank afloat as problems triggered by the international financial crisis hit banks from Iceland to Greece, with governments buying stakes in Belgian, British and Dutch banks.
HRE hailed on Monday the second public-private bailout, which it said would allow it to keep functioning amidst the ongoing financial crisis.
"We are very thankful for the backing of all those involved," HRE boss Georg Funke said in a statement.
"The solution guarantees the stability of the Hypo Real Estate Group, which will have enough liqudity and will be able to continue functioning even as the financial crisis continues," Funke added.
German Chancellor Angela Merkel warned however that "those who managed their company in an irresponsible way will have to answer for it," and Steinbrueck said it was "inconceivable to be able to continue working with the present management" of HRE.
On Sunday, a turbulent day in Europe's biggest economy, the government had also extended a blanket guarantee for all personal bank deposits to avert panic withdrawals.
The move aimed to shore up confidence amid a spreading global financial crisis, in a country in which failing banks bring up particularly bitter memories of the 1930s Great Depression, which helped the Nazis rise to power.
In a bid to head off a run on banks, Steinbrueck assured German account holders they need not worry about losing a "single euro" in the crisis.
Finance ministry spokesman Torsten Albig told the business daily Handelsblatt that the estimated value of the guaranteed accounts would total 568 billion euros.
The total 50-billion-euro lifeline for stricken HRE was agreed in crisis talks between the government, the Bundesbank central bank, market regulators and the banking sector.
Chancellor Angela Merkel's government had scrambled to reach an accord before Asian markets opened Monday, fearing the ultimate collapse of HRE and heavy selling pressure on all German banking shares.
"With this mutually agreed solution, the institution will be stabilised and with it, Germany strengthened as a place to conduct finance in difficult times," the finance ministry said in a statement after the emergency meeting.
But in morning trading on the Frankfurt stock exchange, HRE shares shed a massive 33.69 percent of their value to 4.98 euros, while the Dax index of leading shares had dropped by 4.22 percent overall.
Berlin's daily Tagesspiegel said the government had had no choice but to cobble together a plan for HRE and ensure bank deposits.
"It did so in the interest of its citizens, the millions of German insurance clients, pensioners and small savings account holders," the centre-left newspaper wrote.
http://www.zawya.com/Story.cfm/sidANA206280101726/Troubled%20German%20bank%20HRE%20gets%2050%20billion
%20euros%20in%20bailouts
http://geo.tv/10-6-2008
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