Hypo gets formal extention of EUR 20bn guarantee

Hypo Real Estate confirmed last week that the German federal government has formally extended the term of its EUR 20 bn guarantee until 31 December 2009

The guarantees form part of the EUR 50 bn public-private bailout which kept the struggling property financier falling victim to the credit squeeze last November. In line with applicable EU law, the validity of the overall facility was set for an initial expiration date on 31 March 2009. Following Thursday's announcement, the full EUR 50bn package has been extended to the end of the year.

Hypo Real Estate has been kept afloat by the bailout and a series of guarantees from Soffin, the German bank stabilisation fund. The government has pressed through a law to enable it to nationalise the bank, despite opposition from a consortium led by the JC Flowers which is a major shareholder.