Hypo Real Estate, rescued by state and bank consortium

Newsroom 06/10/2008 | 15:50

The government will provide a further EUR 21 billion guarantee. The bank is also selling EUR 15 billion of assets to cover its liquidity shortfall. It has EUR 400 billion of assets.
Last week, the bank's share price plunged by 70 percent. HRE's trouble prompted other German banks' shares, such as Commerzbank and Deutsche Postbank, with exposure on the property market, to fall 23 percent. Several months ago private equity investor JC Flowers invested EUR 1.1 billion in HRE, buying almost 24.9 per cent of the bank.
The rescue plan came after HRE's inability to refinance short-term borrowing within Depfa, its Dublin-based subsidiary.
HRE admitted it faced “extremely challenging conditions on the international money markets”.

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