Hypo receives additional injection of EUR 12bn in state guarantees

Hypo Real Estate Bank has announced that the German stabilisation fund SoFFin has increased its guarantee agreement by an additional EUR 12 bn. This bring the total state guarantee package granted by SoFFin to Hypo to EUR 42 bn.

Munich-based Hypo Real Estate Bank, part of the Hypo Real Estate Group, is to use the guarantees to collateralise debt securities. The group was saved from collapse last October by a EUR 50 bn public-private bailout, which is separate to the SoFFin guarantee agreement.

There seem to be no end in sight to Hypo Real Estate's need for state support. In a statement on Wednesday, the financier said: 'Negotiations between Hypo Real Estate and SoFFin regarding more extensive and longer-term liquidity and capital support measures for the group have not yet been finalised'.

Media reports have suggested that the German government has considered taking a stake in Hypo Real Estate but this option is being held in reserve.