BRUSSELS (MNI) – The European Commission’s antitrust arm on Friday
temporarily cleared more German government aid to lender Hypo Real
Estate (HRE), but said it still had doubts about the long term viability
of the bank.
The EU’s executive arm said it “has temporarily authorized under EU
state aid rules a transfer of approximately E200 billion of toxic and
non-strategic assets into a winding-up institution, and additional state
guarantees of up to E40 billion…for reasons of financial stability.”
It said it will take a final view on the compatibility of these
measures with EU state aid rules in the context of its ongoing
investigation into the restructuring of HRE.
A Commission spokesperson said Friday’s temporary approval didn’t
prejudge the final outcome of the investigation.
She said HRE is being split into two parts and one of the parts is
being relieved of a burden of toxic assets.
“The huge transfer of impaired assets to a ‘bad bank’ and the
additional state guarantees should contribute once and for all to
stabilizing Hypo Real Estate,” Joaquin Almunia, EU Commission Vice
President in charge of competition policy said in a statement.
“The new aid measures will be included in the ongoing in-depth
investigation that can only be concluded when we can see the full
picture of the restructuring,” Almunia added. “At this stage I still
have doubts about the long-term viability of HRE.”
HRE was taken into state ownership in 2009 and has already received
German State guarantees of E105 billion and capital injections of around
E7.9 billion.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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