Germany’s Hypo Real Estate puts €173bn of assets into a bad bank

GERMANY’S Hypo Real Estate completed its transfer of non-strategic and risky assets to a “bad bank” as the nationalised lender restructures in the wake of the financial crisis.

Hypo Real Estate (HRE) transferred loans and securities worth a nominal €173bn (£150.8bn) to a work-out institution called FMS Wertmanagement, HRE said in a statement yesterday, adding that this was the largest transfer of its kind in Germany to date.

Following the transfer, the remaining core or “good” bank, called pbb Deutsche Pfandbriefbank, will no longer depend on liquidity life-support measures from the government, HRE said. “The transfer of assets to FMS Wertmanagement represents the single most important milestone in realigning the group,” HRE’s chief executive Manuela Better said in the statement. “Our new core bank, pbb Deutsche Pfandbriefbank, has retained those assets that match its strategic focus and we will concentrate on writing new business in our European core markets,” she said.

HRE’s business model combining property finance with investment banking came unstuck in the financial crisis, forcing the lender to turn to Berlin for more than €100bn in assistance.