Hypo posts net loss of EUR 750m in Q2

Troubled German property financier Hypo Real Estate (HRE) has announced a net loss of EUR 750 mln in the second quarter of 2009 compared to a profit of EUR 12 mln in the same period last year. Overall, the bank recorded a net loss of EUR 1.1 bn for the first half of 2009.

HRE said its Q2 and first-half figures were 'very much affected by the crisis on the international capital, finance and real estate markets as well as the extremely difficult situation of the institution.' The bank was saved from collapse by a EUR 50 bn public-private rescue package in October 2008, and it has received further guarantees since then to enable it to continue operating.

The bank said its operating results were considerably depressed by the costs of the liquidity support provided to HRE by a financial syndicate and the German bank stabilisation fund Soffin.

HRE said, however, that it had made major progress with regard to restructuring the group. The bank has carried out a capital increase of EUR 2.96 bn and concentrated its focus on the German covered bond funding mechanism by the establishment of Deutsche Pfandbriefbank as its core unit. HRE has closed 15 out of a total of 26 group locations which were due to be closed, and agreed to cut staff by about 300 compared with November 2008.

HRE's CEO Axel Wieandt said: 'The first half year was characterised by considerable impairments recognised in relation to our real estate credit portfolio. We continue to anticipate significant charges on results which will lead to a continuing loss situation. From today's perspective, we do not envisage a return to profitability before 2012.'