The FINANCIAL -- Brussels, 18 July 2011 – The European Commission has approved under EU
state aid rules restructuring aid consisting of capital injections of €
10 billion, an asset relief measure with an aid element of about € 20
billion, as well as liquidity guarantees amounting to €145 billion for
the banking group Hypo Real Estate.
The Commission concluded that the restructuring plan of HRE and its core bank pbb Deutsche Pfandbriefbank (pbb) is liable to restore pbb's long-term viability while ensuring that the bank and its former owners adequately contribute to the restructuring costs and that the distortions of competition created by the aid are mitigated. All business activities of the HRE group will be phased out, except for the activities of pbb. At the end of 2011, pbb's adjusted balance sheet size will be around 85% smaller than HRE group's balance sheet size at the end of 2008. This will adequately address the distortions of competition created by the massive state support received by the German banking group during the financial crisis.
Commission Vice President in charge of competition policy Joaquín Almunia said: "Today's decision brings one of the most significant financial crisis state aid cases to a constructive close. HRE and its core bank pbb Deutsche Pfandbriefbank are significantly downsizing to limit the competition distortions caused by the huge state support they needed to survive the crisis. The restructuring plan seeks to ensure that the serious liquidity problems which threatened HRE's existence some years ago cannot be repeated, so as to ensure the future viability of pbb."
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