The German state of Hesse has confirmed that Helaba Bank is getting a capital injection of EUR 480 mln, even though the bank says it expects to break even for the full-year 2008.
The German state of Hesse has confirmed that Helaba Bank is getting a capital injection of EUR 480 mln, even though the bank says it expects to break even for the full-year 2008.
In contrast, several other German banks, including the country's second largest property lender, Hypo Real Estate, have had to turn recently to the German bank rescue fund SoFFin after recording hefty writedowns on investments.
The ruling Christian Democrat party in Hesse and their Liberal Democrat allies have thrown their weight behind the proposal to provide support to Helaba, the German Landesbank of Hesse and Thuringia. Hesse owns 10% of Helaba while the state of Thuringia has a 5% stake. The remaining 85% is held by the states' saving banks associations.
Hesse's government hopes the capital injection will stimulate lending to small and medium businesses and for crucial public work projects. Both the state government and Helaba stress that the bank is not in financial difficulty. The bank has indicated that it made a pre-tax profit of EUR 64 mln in the first nine months of 2008 and expects to stay in the black for the whole year.
Helaba is a significant player in the financing of real estate. The bank is part of the consortium behind a EUR 400 mln refinancing facility for property assets in La Defense in Paris. In another recent transaction, Helaba structured and concluded a EUR 76.7 mln financing for the acquisition of the Nisa shopping centre in the Czech city of Liberec by one of ING Real Estate's funds. At the end of January Helaba announced it is opening offices in Berlin and Munich as part of the company's strategy aimed at expanding its domestic real estate business.
