Hypo Real Estate (HRE), the German finance company which nearly collapsed last month, applied on October 29 for additional equity funds from the German government’s new bail-out plan, the company and government officials said. Germany’s first big casualty of the current crisis, HRE won 50 billion Euro in guarantees earlier this month from the government and German banks. It said at its head office in Munich it had now applied for a cash injection of 15 billion Euro (USD 19 billion) from new federal fund.
It is the first German commercial bank to see help from Soffin, a new government agency created by parliament on October 17. Previously, three state-owned banks had said they would seek help from Soffin. Investors welcomed the application by HRE. HRE rose 11 percent to 5.42 Euro on the Frankfurt Stock Exchange, clawing back some of the 80-percent loss it has suffered in recent weeks. Soffin has 70 billion Euro at its disposal to both inject equity into banks and to acquire toxic assets from them.
HRE, a mortgage lender to commercial developers and public bodies, said the injection was needed to meet short-term funding needs. “We are expecting a prompt decision,” it added.
Germany’s commercial banks have been criticised for their reluctance to lose face and beg for funds from Soffin, which has set up its offices at the Bundesbank central bank in Frankfurt.