Germany’s financial sector was in big crisis on Monday after Hyper Real Estate one of its biggest lenders, had to be rescued by other banks and the government to solve a €50bn liquidity crisis.
Shares in HRE dropped more than 70 per cent and other banking stocks went down after the intervention, the most serious sign of strain in Germany’s financial sector since the collapse of Lehman Brothers aggravated the global credit crisis this month.
Shares in HRE dropped more than 70 per cent and other banking stocks went down after the intervention, the most serious sign of strain in Germany’s financial sector since the collapse of Lehman Brothers aggravated the global credit crisis this month.
The Hypo Real Estate Holding AG (is a holding company based in Munich, Germany which comprises a number of real estate financing banks. The company's activities span three sectors of the real estate market: commercial property, infrastructure and public finance, and capital markets and asset management.
HRE, one of Europe’s biggest commercial property and public sector lenders, was handed a €35bn liquidity lifeline by other German private sector banks, the Bundesbank and the European Central Bank. The lender is also selling €15bn of assets to cover its liquidity shortfall.
The urgent bail-out was agreed in the early hours of yesterday with Mr Steinbrück and Angela Merkel, German chancellor, in telephone contact with bankers and officials meeting in Frankfurt.
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