The German government and the country's banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG after an earlier bailout faltered.
Germany's financial industry agreed to double a credit line for Hypo Real Estate to 30 billion euros, Torsten Albig, a spokesman for Finance Minister Peer Steinbrueck, said late yesterday in an e-mailed statement.
The federal government's guarantee for the credit line remains unchanged, Albig said.
The government and the Bundesbank have said that Hypo Real Estate, Germany's second-biggest property lender, is too big to fail.
They met with banks and insurers in Berlin all day yesterday to discuss a revamped rescue package after private banks on Saturday withdrew their support for a 35 billion-euro rescue package brokered a week ago.
‘The need for an enlargement of the bailout has increased investors' concern that Hypo Real Estate will have to be wound- own eventually,' said Konrad Becker, a Munich-based analyst at Merck Finck & Co. who recommends selling the shares.
The stock fell as much as 54 percent in Frankfurt electronic trading and traded down 3.6 euros, or 48 percent, at 9:15 a.m. The stock has slumped 89 percent this year, valuing the company at about 832 million euros.
Under the previous rescue plan, the Bundesbank intended to contribute 20 billion euros to a credit line for Hypo Real Estate, while a group of unidentified financial institutions agreed to provide another 15 billion euros.
The German government and banks and insurers also planned to provide an additional guarantee for the repayment of the 35 billion-euro loan, of which the government would cover 26.5 billion euros.