Hypo RE posts EUR 3bn pre-tax loss in Q3

German commercial bank Hypo Real Estate has reported a third-quarter pre-tax loss of about EUR 3.1 bn as a result of the 'worsening global financial crisis.' The bank, which recently received a EUR 50 bn lifeline from the German government and the private sector, said that the negative result is largely due to the write-off of EUR 2.5 bn on its Dublin- based unit Depfa.

Germany's second-biggest property lender expects EUR 600 mln in writedowns related to the collapse of US investment bank Lehman Brothers, the situation in Ireland, an investment in Babcock & Brown and other losses related to collateralised debt obligations. It also recognised additional charges of EUR 100 mln as a result of the 'deterioration of the real estate markets.'

Hypo RE negotiated a EUR 50 bn rescue package in October after its Dublin arm Depfa failed to get short-term funding amid the credit crisis. The bank said the funds have an initial term maturing on 31 December 2009. In a statement, Hypo RE said that it is providing collateral of EUR 60 bn to secure the facility. In addition, the bank has pledged its shares in the group's operating bank subsidiaries as collateral.

Looking ahead, Hypo RE expects that the fourth-quarter results will be negatively affected as a 'result of the costs of the agreed liquidity facility' as well as charges related to the 'necessary restructuring and repositioning of the group.'

'Overall, the market environment remains difficult. The costs of the EUR 50 bn facility and the restructuring will also impact on results for 2009,' the bank said. The commercial property lender is in talks with SoFFin, the German federal bank rescue fund, for further extensive support.