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IP/0 9/1985

Brussels, 21st December 2009

State aid: Commission temporarily approves €18 billion state guarantees for German bank Hypo Real Estate

The European Commission has temporarily approved two state guarantees of €8 billion and €10 billion respectively for German bank Hypo Real Estate (HRE) under EU state aid rules. The Commission found that the guarantees are an appropriate means to remedy a serious disturbance in the German economy and as such compatible with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU). These guarantees will be used by HRE to cover urgent liquidity needs of the bank. These, as well as previous rescue measures in favour of HRE, will be taken into due account when the Commission takes its final decision on HRE's restructuring plan.

Competition Commissioner Neelie Kroes said: “These guarantees will help the bank to cover urgent liquidity needs. Of course these measures will be taken into account when the Commission takes a final decision on the bank's restructuring plan."

HRE is an internationally active bank with its headquarters in Munich, Germany. It has a balance sheet of around €390 billion. It is composed mainly of Hypo Real Estate Holding AG, Deutsche Pfandbriefbank AG and the Irish DEPFA Bank plc.

In October 2008 HRE group was severely affected by the financial crisis, benefitted from several state support measures and was taken into state ownership in 2009.

On 1 April 2009 Germany submitted a restructuring plan for the bank to the Commission. On 7 May 2009 the Commission opened an in-depth investigation into state measures for the bank (see IP/09/712 ). On 13 November 2009 the Commission extended this investigation in order to cover additional measures (see IP/09/1708 ).

The €8 billion guarantee will start on 23 December 2009 and will expire on 22 December 2010. The €10 billion guarantee will be granted in the coming months if necessary for urgent liquidity needs. Both guarantees will be granted by SoFFin (Special Fund Financial Market Stabilization).

The Commission has already authorised temporarily several measures at an earlier stage (e.g. a state guarantee of €35 billion). The Commission will take into consideration all the measures granted when it will take its final decision on the restructuring plan of HRE.

The non-confidential version of the decision will be made available under the case number N 694/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .


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