Hypo Real Estate Holding AG, the German lender bailed out during the financial crisis, has been ordered by the European Commission to privatize its two remaining units over the next four years.
The Munich-based lender’s biggest operation, pbb Deutsche Pfandbriefbank, has to be sold by the end of 2015 at the latest and its Depfa Bank Plc unit by the end of 2014, Hypo Real Estate said in an e-mailed statement today.
The EU Commission, the European Union’s executive arm in Brussels, is examining the restructuring of lenders that needed state aid during the financial crisis including Hypo Real Estate, Bayerische Landesbank, WestLB AG and HSH Nordbank AG. While regulators today approved Germany’s 30 billion-euro ($41 billion) bailout package for HSH, EU Competition Commissioner Joaquin Almunia said that talks over the restructuring of BayernLB are “taking much longer than I wish.”
Hypo Real Estate, led by Chief Executive Officer Manuela Better, in July got the commission’s approval for its German-government rescue and is fully owned by the state. It moved about 176 billion euros in assets to the FMS Wertmanagement bad bank on Sept. 30, 2010. FMS, also based in Munich, has the task of winding down the assets over a period of 10 years.
Depfa Bank Plc is closed to new business, while pbb Deutsche Pfandbriefbank reported its fourth consecutive profitable quarter last month.
The sale should seek to return “as much of the support provided by the German state as possible,” Hypo Real Estate said in today’s statement.
Hypo Real Estate needed 10 billion euros in capital and 142 billion euros in credit lines and debt guarantees from the state and financial institutions to save it from collapse after Dublin-based Depfa couldn’t raise financing in 2008 following the bankruptcy of Lehman Brothers Holdings Inc.