Hypo Real Estate gets first cash injection

Troubled German property lender Hypo Real Estate has obtained a €15 billion ($19.3 billion) state loan guarantee under the government rescue plan for the banking sector, a spokesman said late on Thursday.

Hypo Real Estate gets first cash injection
Photo: DPA

The guarantee provided by the Financial Markets Stabilization Fund (SoFFin) will cover a bank bond that HRE will use as collateral to get cash from the central Bundesbank. HRE needs the funds to maintain current operations. It is the first private German financial institution to take advantage of a government package offering up to €400 billion in loan guarantees and up to €80 billion in capital injections.

German regional bank BayernLB has also applied for the aid, with a request for €5.4 billion, while other regional banks have said they are mulling requests as well.

In morning trading on the Frankfurt stock exchange, HRE shares slipped by 0.76 percent to €5.23, while the Dax index of German blue-chips was off by 1.44 percent overall.

The real estate specialist was caught in a liquidity crunch which worsened after US investment bank Lehman Brothers declared bankruptcy in September. HRE is already the subject of a rescue plan worked out by the government, the German central bank and a financing consortium worth €50 billion, and the short-term guarantee unveiled late on Thursday will keep HRE going until the full sum is available. “It is envisaged to provide the full extent of liquidity facilities by mid-November,” a statement said.

The HRE rescue earlier this month was the biggest in German history and came after the real-estate lender was drawn into global financial turmoil, through its inability to refinance debt, one of several high-profile European emergency cases.

HRE was hobbled by debts incurred by a German-Irish subsidiary, Depfa, which it bought in October 2007, after the international financial crisis emerged with the collapse of the US market for high-risk, or subprime, mortgages.

Depfa specialises in the financing of public works projects. The parent real-estate bank found itself unable to refinance operations owing to a credit squeeze that worsened after Lehman Brothers declared bankruptcy on September 15.


Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.