The German government said is confident it will reach an agreement in the "near future" with the European Union on the restructuring and future operations of Hypo Real Estate Holding after talks with EU Competition Commissioner Joaquin Almunia.

The finance ministry said today the government is in "close and constructive" talks with the European Commission to support a "quick" conclusion of the state-aid probe.

Reaching an agreement is a "decisive step" to enable the privatization of Hypo Real Estate, it said.

Hypo Real Estate is is wholly owned by the German government's Soffin bank-rescue fund.It took full ownership in 2009 following a squeeze-out that forced minority investors, including US investor J Christopher Flowers, to sell their remaining shares.

Bloomberg