The latest crisis averted…..From Bloomberg:
The German government and the country’s banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG after an earlier bailout faltered.
Germany’s financial industry agreed to double a credit line for Hypo Real Estate to 30 billion euros, Torsten Albig, a spokesman for Finance Minister Peer Steinbrueck, said late yesterday in an e-mailed statement. The federal government’s guarantee for the credit line remains unchanged, Albig said.
The government and the Bundesbank have said that Hypo Real Estate, Germany’s second-biggest property lender, is too big to fail. They met with banks and insurers in Berlin all day yesterday to discuss a revamped rescue package after private banks on Saturday withdrew their support for a 35 billion-euro rescue package brokered a week ago.
The German government and banks on Sunday agreed a new rescue package for Hypo Real Estate (HRXG.DE: Quote, Profile, Research, Stock Buzz) that addresses additional liquidity needs that surfaced at the troubled German lender in recent days, the Finance Ministry said.
Under the deal, commercial banks and insurers would provide an extra 15 billion euros ($20.8 billion) in liquidity for HRE on top of the 35 billion euros they already committed together with the Bundesbank, the ministry said.
The solution will stabilize HRE and strengthen the German finance sector, it added.
A ministry spokesman said HRE was saved and there would be no extra burden on the German tax payer.