Nationalised real estate lender Hypo Real Estate Group (HRE) has transferred troubled assets worth around EUR 173 bn to a government-guaranteed ‘bad bank’, FMS Wertmanagement, the German government’s federal bank rescue fund said on Monday.
Nationalised real estate lender Hypo Real Estate Group (HRE) has transferred troubled assets worth around EUR 173 bn to a government-guaranteed ‘bad bank’, FMS Wertmanagement, the German government’s federal bank rescue fund said on Monday.
The fund said HRE also transferred derivatives designed to hedge the transferred assets against interest rate risks. The transfer of non-strategic assets and risk positions is an important milestone in the restructuring of HRE, the fund said. ‘Deutsche Pfandbriefbank, which is responsible for the operational business, can now focus on its core business of real estate and public finance in Germany and other European countries,’ the rescue fund said.
FMS Wertmanagement was set up in July as an ‘unwinding vehicle’ for HRE’s bad assets. In September, HRE was given an extra EUR 40 bn in loan guarantees, taking total guarantees to EUR 142 bn. FMS will liquidate the assets over the next 10 years The federal rescue fund said HRE has so far drawn on EUR 3.5 bn of the EUR 40 bn in guarantees and deposited EUR 20 bn with the German central bank to cover the operational risks of the transfer.
