Germany’s financial regulator, Bafin, had launched an investigation into Hypo Real Esatte as to whether the bank failed to inform investors of its profits slump in a timely fashion. Financial Times

The bank would face a fine of up to €1m ($1.5m) if it were found to have breached regulations, said Bafin.

Hypo Real Estate rejected suggestions that it had breached the rules. 'The group has acted in accordance with all rules and regulations,' it said.

The company lost more than a third of its market capitalisation on Tuesday when it shocked investors with news of a charge of nearly €400m for losses on investments in the credit market.

The charges were smaller than at many comparable German banks but still disappointed investors and fuelled criticism of Hypo Real Estate’s management, which last year assured the market that it had not been badly affected by the credit squeeze.