Hypo Real Estate taps government's rescue fund

Hypo Real Estate became Germany's first listed bank to tap the government's recently set up EUR 500 mln rescue fund on Wednesday, asking for a short-term loan and saying that it may seek fresh capital.

The troubled bank has asked for a guarantee to enable it to get a EUR 15 bn advance from Germany’s Bundesbank, or Central Bank, to tide it over while the final stages of negotiations concerning the EUR 50bn rescue package agreed by a consortium of unidentified German banks, the Bundesbank and the German Ministry of Finance earlier this month are carried out.

Hypo Real Estate said in a statement yesterday (Wednesday) that it expected the liquidity lines to be made ‘fully available’ by mid-November. A decision regarding the request for short-term cash would be made shortly, according to spokesman Oliver Gruss.

The news came as little surprise to analysts who say the company already disappointed the market when its first rescue package collapsed.

'The bridge facility is not ‘innocent’, as it shows again that the company had a massive maturity mismatch. The bridging facility was necessary as the funding provided by the consortium seems to be delayed - it was supposed to start at the beginning of November. I cannot exclude that the bank has an additional liquidity need as the overall mistrust in the interbank market is still very high,'said German real estate banking analyst Kerstin Vitvar at the UniCredit Group.

Hypo Real Estate will also submit an application to the Financial Markets Stabilisation Fund asking for additional comprehensive support, including potential capitalisation measures, it said in a statement. It declined to give further details.

Some of Germany’s public sector landesbanks have already tapped the Financial Markets Stabilisation Fund, including BayernLB and HSH Nordbank.

Hypo Real Estate’s share price was up by 2.95% this morning to EUR 5.23.