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ECONOMY

HRE bank gets €12 bln more in guarantees

The German state will provide another €12 billion ($15 billion) in guarantees to struggling Hypo Real Estate bank, bringing the total to €42 billion, HRE announced late Tuesday evening.

HRE bank gets €12 bln more in guarantees
Photo: DPA

HRE, the biggest German victim of the global financial crisis, has already had €50 billion in state aid and €30 billion in guarantees.

“The German Financial Markets Stabilisation Fund has extended its framework guarantee granted to Hypo Real Estate Group by an additional €12 billion, bringing the aggregate guarantee amount to €42 billion,” the bank said.

The bank said it “can use the additional guarantees … to collateralise debt securities to be issued, which must be due for repayment by June 12, 2009 at the latest.”

HRE was a frontline casualty when the high risk US subprime mortgage market collapsed, putting the global financial system under unprecedented stress. Even with the huge aid given has not been enough to get HRE back on its feet.

A spokesman for Chancellor Angela Merkel’s Christian Democrats said last week the government could buy one third or more of the troubled property lender. The government has already partially nationalised the second biggest German bank, Commerzbank.

In December, HRE said it would slash its workforce by almost half in three years, part of a series of draconian moves to save it from bankruptcy. HRE posted a net loss of €3.1 billion in the third quarter of 2008 and said it expects additional losses in its fourth quarter and annual results.

Berlin has set up a banking sector rescue package that is to provide up to €80 billion in cash injections and €400 billion in loan guarantees to prevent a collapse of the financial sector.

MONEY

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.

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