The European Commission has formally approved the aid provided by the German government to Hypo Real Estate since the credit crisis broke out in 2008. The multi-billion euro aid package saved the bank from collapsing amid a credit squeeze. Hypo Real Estate Bank was subsequently restructured and merged with the group's Depfa Bank under the new name pbb Deutsche Pfandbriefbank
The European Commission has formally approved the aid provided by the German government to Hypo Real Estate since the credit crisis broke out in 2008. The multi-billion euro aid package saved the bank from collapsing amid a credit squeeze. Hypo Real Estate Bank was subsequently restructured and merged with the group's Depfa Bank under the new name pbb Deutsche Pfandbriefbank
Hypo Real Estate said the Commission's decision recognised the viability of Deutsche Pfandbriefbank's business model as a specialist bank for real estate finance and public investment finance.
The bank already largely complies with the restructuring requirements which the EU Commission has imposed as conditions for its approval aid, Hypo Real Estate said in a statement.
Manuela Better, CEO of Hypo Real Estate Holding and Deutsche Pfandbriefbank welcomed the Commission's decision. 'Although the conditions imposed are very extensive, they offer sufficient potential for the success of the realigned Deutsche Pfandbriefbank on the credit and capital markets. The bank has been profitable since the third quarter of 2010, and we also posted a profit for the second quarter of 2011 - as expected.'
Better confirmed the bank's new business volume target of up to EUR 8 bn for 2011. 'Our goal is to prepare Deutsche Pfandbriefbank for reprivatisation - which is also a requirement stipulated by the EU Commission,' she added.
The conditions imposed by the EU Commission will lead to a marked reduction of total assets, compared with the situation at end-2008, when HRE's consolidated total assets stood at around EUR 420 bn. At end-March 2011, Deutsche Pfandbriefbank's consolidated total assets amounted to EUR 102 bn, with about EUR 200 bn of non-strategic assets earmarked for the German Financial Markets Stabilisation Agency (FMSA), a bad bank structure.
