Hypo Real Estate’s €50bn (£40.8bn) government-led bailout package has been finalised.
The troubled German property lender said this morning that month-long talks with the German Federal Government, Deutsche Bank and a ‘financial consortium’ had concluded and ‘the relevant legal documentation has been signed, or is ready to be signed’.
The funds will be made available to Hypo from 13 November.
They have been ‘partially’ guaranteed by the government and subject to an extension of this guarantee beyond March 2009, the funds will be made available until 31 December 2009. Hypo said it would approach the government ‘in due course’ for an extension of the guarantee beyond its initial term.
Hypo is providing €60bn (£49bn) in collateral, comprising loans and securities, to secure the facility.
The bank was among the first in Europe to require government help. On 3 October, it agreed a €35bn (£28bn) bail-out package with the government-led banking consortium but that deal fell apart just days after it was agreed.
Then on 6 October the increased €50bn (£40.8bn) package was agreed. The plight of the bank led to the resignation of CEO Georg Funke two days later.
Hypo is also the first German lender to ask for funds from the German government’s €500bn (£398bn) wider banking bailout package asking for €15bn (£12.25bn) to cover its short-term liquidity requirements, on 29 October.
Since then, few other German banks have approached the government for funds.