GERMANY’S STATE-BACKED lenders LBBW and Hypo Real Estate (HRE) remained deep in the red in 2009, hit by heavy loan losses, and signalled a long slog to return to health.
Hypo Real Estate, once a blue-chip property lender but now a ward of the state after Berlin was forced to nationalise it last year, posted a €2.2 billion net loss for 2009 and said it would not return to profit before 2012.
Manuela Better, on her first day as Hypo Real Estates interim chief executive after former chief executive Axel Wieandt stepped down on Thursday, said the bank’s results would take a significant hit in 2010 from costs linked to the set-up of a run-off bank to which Hypo will spin off bad assets.
“We want to dampen the losses relative to 2009. But as long as the . . . planned run-off bank has not been decided, we have to continue to assume that the group will not return to profit before 2012,” she said.
The lender almost collapsed in 2008 when its Dublin-based Depfa Bank unit, which it agreed to acquire in July 2007 for €5.3 billion, failed to secure short-term funding after the bankruptcy of Lehman Brothers.
Meanwhile, LBBW, the country’s biggest landesbank, predicted financial conditions would remain difficult this year, making it impossible to give a precise earnings forecast, after it posted a net loss of €1.5 billion in 2009. – (Reuters/Bloomberg)
