Three German banks tap state funds for aid
Berlin - Three reeling German banks tapped state funds for billions of euros in aid Friday.
Hamburg-based HSH Nordbank said SoFFin, a federal government agency which has a 480-billion-euro war chest, had agreed to provide it with up to 30 billion euros (37 billion dollars) in guarantees to rescue it.
Chief executive Dirk Jens said the shareholders, which include two German states - Hamburg and Schleswig-Holstein, would also provide equity to the battered institution that announced weeks ago it was seeking SoFFIn aid.
Another of Germany's nine landesbanks, which are run by various state governments, said its state, Baden-Wuerttemberg, would give it a 5-billion euro (6.3-billion-dollar) capital injection.
Shareholder sources told Deutsche Presse-Agentur dpa that Landesbank Baden-Wuerttemberg (LBBW) was likely to run up a 2- billion-euro loss in the current year.
In announcing the capital injection, LBBW became the latest German bank to seek out state aid to help it limp through the financial crisis.
Munich-based BayernLB was the first landesbank to ask for state assistance, tapping SoFFin last month for 5.4 billion euros.
The moves add to pressure for consolidation in Germany's state banking sector, in particular between LBBW and BayernLB.
In October alone LBBW is estimated to have clocked up an 800- million-euro loss, with the Stuttgart-based bank's loss for the first nine months of the year coming in at 900 million euros.
The capital injection helped to boost LBBW's core capital ratio to 9 per cent from 7.3 per cent.
Hypo Real Estate (HRE), the first German bank to nearly collapse in September, said Friday it had won 20 billion euros (25 billion dollars) in guarantees from SoFFin after weeks of talks.
Stockmarket-listed HRE said the underpinning would improve its liquidity and help it refinance debt that falls due up to January 15, 2009.
The Munich-based mortgage lender was rescued from imminent collapse by an earlier, 50-billion-euro batch of guarantees from the government and other commercial banks. (dpa)