Germany's Hypo Real gets $68 billion lifeline

06 October 2008

Mumbai: Hypo Real Estate Holding AG, Germany's second biggest real estate lender, will get a fresh rescue package of 50 billion euros ($68 billion) after an earlier bailout faltered.

The German government and the central bank Bundesbank are coordinating  the 50 billion euro rescue package with funds from the country's banks and the insurers.

The federal government has extended a 20 billion euro credit line to the beleaguered Hypo Real Estate while the country's financial industry has agreed to double a credit line 30 billion euros, reports quoting Torsten Albig, spokesman for finance minister Peer Steinbrueck, said.

The rescue package was announced after government and Bundesbank  officials met with banks and insurers in Berlin following the failure of a 35-billion euro rescue package brokered a week ago.

The government and the Bundesbank have said that Hypo Real Estate, Germany's second-biggest property lender, is too big to fail.

Under the earlier plan, the Bundesbank was to contribute 20 billion euros credit line for Hypo Real Estate, while another 15 billion euro came from a group of unidentified financial institutions. The 35 billion euro package also provided for an additional guarantee of 35 billion euros, of which 26.5 billion would come from the government.