BERLIN (MNI) – German Economics Minister Rainer Bruederle said
Monday that it was “quite a surprise” to him that the government’s
Financial Market Stabilization Fund (Soffin) on Friday had to grant the
state-owned lender Hypo Real Estate (HRE) additional loan guarantees of
up to E40 billion through the end of the year.
Still, Bruederle stressed that the government had no choice but to
support the bank. Letting HRE go bankrupt was not an alternative, given
the negative fallout such a move would have had on the whole financial
system, he said.
HRE aims to move risky as well as non-strategic assets into a
separate clearing institute (FMS Wertmanagement). The additional
guarantees are aimed at preventing any liquidity squeeze as the HRE
moves ahead with the plan, the Soffin said Friday.
Bruederle said he hoped that moving risky assets into the FMS
Wertmanagement would stabilize the HRE further and that, in the end,
there would be no significant financial burden for the government.
In July, HRE said it aimed to transfer assets worth up to E210
billion in the second half of 2010 to the FMS Wertmanagement. “This
transfer will substantially reduce risk-weighted assets,” HRE said.
–Berlin bureau: +49-30-22620580; email: twidder@marketnews.com
[TOPICS: M$X$$$,M$G$$$,M$$CR$,MGX$$$]
