–Adds Comments From The German Finance Ministry On Debt/GDP Impact
BERLIN (MNI) – Germany’s Financial Market Stabilization Fund
(Soffin) will move about E191.1 billion worth of risky and non-strategic
assets from the state-owned lender Hypo Real Estate (HRE) to the newly
founded clearing institute FMS Wertmanagement (FMSW) by September 30,
Soffin said Wednesday.
The German Finance Ministry said in a separate statement that
Eurostat will likely view the FMSW as part of the public sector. In the
case the FMSW is completely related to the public sector the German debt
to GDP ratio will likely rise by up to around 7.5 to 8.5 percentage
points, the Ministry explained, adding that this was purely statistical
and would not lead to extra interest payments on debt.
Earlier this month, Soffin extended up to E40 billion in extra loan
guarantees to HRE, good through the end of this year, increasing the
total volume of guarantees temporarily to E142 billion. The additional
guarantees are aimed at preventing any liquidity squeeze when HRE moves
the assets to the FMSW.
Liquidity problems for HRE could arise from unfavorable
developments in interest and credit markets, or from unforeseeable
settlement and transfer risks as the bank splits off its risky and
non-strategic assets, Soffin explained earlier this month.
–Berlin bureau: +49-30-22620580; email: twidder@marketnews.com
[TOPICS: MT$$$$,M$X$$$,M$G$$$,M$$CR$,MGX$$$,M$$FX$]
