Wednesday July 1, 09:59 AM
HRE bank to lose two bln euros in 2009-2010: report
FRANKFURT (AFP) - German state-owned bank Hypo Real Estate (Xetra: 802770 - news) (HRE) will probably lose more than two billion euros (2.8 billion dollars) by the end of next year, a press report said on Wednesday.
Most of the losses should occur this year, the Sueddeutsche Zeitung newspaper added, quoting financial sources.
"HRE will also have to record large asset depreciations in the second quarter" of 2009, the head of the bank's supervisory board, Michael Endres, told the newspaper in an interview.
The property lending specialist warned last week it expected a "significant" drop in second quarter results, with a loss of "at least hundreds of millions of euros" and that it did not forecast a profit before 2011 at the earliest.
HRE was slammed by the international financial crisis and nationalised by the government to prevent a failure that officials said could have effects similar to those which followed the bankruptcy of US investment bank Lehman Brothers (NYSE: LEH - news) in September.
HRE is a pivotal part of Germany's economy. In addition to its real-estate activities, the bank plays a major role in the issuance of "Pfandbriefe," bonds in which small investors, savings banks and insurance companies have placed large sums.
It is to publish quarterly results on August 7. In the first quarter it posted a net loss of 382 million euros, following a full-year 2008 loss of 5.4 billion euros.
HRE has already received more than 100 billion euros in state aid and the government now owns 90 percent of the bank.
Berlin plans to acquire the remaining 10 percent.
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