Nationalized German property lender Hypo Real Estate plans to shift about €210 billion ($298.3 billion) in assets to a “bad bank” in the second half of 2010, its operating unit said.
“The HRE Group intends to transfer operations no longer strategically required for the group's realignment, as well as additional balance sheet items, to this deconsolidated environment,” Deutsche Pfandbriefbank AG, the operating unit that emerged from Hypo Real Estate, said in a statement.
It added that the establishment of the institution would be in the discretion of the German Financial Markets Stabilization Agency (FMSA).
Hypo Real Estate became Germany's highest profile casualty of the credit crunch after it needed more than €100 billion in guarantees, mostly from the state, to prevent it from going under.
Now the lender is restructuring and is making use of the “bad bank” scheme, which allows banks to transfer problem assets off their own balance sheets. (Reuters)