HRE has €382 Million Loss on Writedowns

Hypo Real Estate, the government-aided German commercial real-estate lender, reported a first-quarter loss because of writedowns.

The Munich-based lender posted a net loss of €382 million in the three months to March compared with a profit of €148 million a year earlier, it said in an e-mailed statement today.

Loss: Hypo Real Estate bank (Photo by Johannes Simon/Getty Images)

Hypo Real Estate avoided bankruptcy after receiving credit lines and debt guarantees of €102 billion from the German government and financial institutions. Germany’s Soffin bank-rescue fund, which offered €1.39 a share to buy Hypo Real Estate, today announced that 32.3 percent of investors accepted the offer to May 4.

“The first quarter of 2009 again posed a major challenge for the group and its employees in market conditions which continued to be difficult,” Chief Executive Officer Axel Wieandt said in the statement. “We are however, making good progress with restructuring.”

The company had a net trading loss of €162 million after markdowns on collateralized debt obligations and other securities. Loan-loss provisions rose almost sixfold to €196 million as it set aside more money for possible defaults amid the “deterioration of the global economy.”

Hypo Real Estate, which plans to cut 1,000 jobs by 2013 as it focuses on real estate and public sector financing, has said it will probably remain unprofitable for at least two more years. The lender almost collapsed after its Dublin-based Depfa Bank Plc unit failed to secure short-term funding in September.

Net interest income, the company’s biggest source of revenue, rose 24 percent to €371 million while net commissions showed a loss of €108 million because of costs related to the bailout. (Bloomberg)

- Aaron Kirchfeld and Oliver Suess

independent.ie