Hypo Real Estate has become the first private sector German bank to ask for funds from the German government’s €500bn (£398bn) Financial Markets Stabilisation Fund.
The troubled property lender has asked the government for €15bn (£11.9bn) to ‘cover short-term liquidity requirements’. The request comes just one month after the bank agreed a €50bn (£39.7bn) bail-out package with a government-led consortium of other German banks.
The request follows that of state controlled Bayern LB, which is believed to have approached the German government for about €5bn (£3.96bn). The government fund was approved early last week.
Hypo said today in a statement: ‘The contractual agreements with a German finance sector consortium, Deutsche Bundesbank and the German Ministry of Finance regarding the liquidity lines totalling €50bn, as announced on 6 October 2008, are currently in the final stages of negotiation. The liquidity lines are to be made fully available by mid-November.’
‘To cover Hypo Real Estate Group’s short-term liquidity requirements in the meantime, also against the backdrop of recent market developments, the group yesterday submitted an application to the Financial Markets Stabilisation Fund for a guarantee with respect to a provision of €15bn of liquidity by Deutsche Bundesbank. A decision is expected shortly.’
‘The utilisation of the fund is expected to cover the group’s additional funding requirements once the liquidity facilities extended by the consortium have been disbursed, thus providing the basis for the medium-term re-positioning of the group.’