The award of significant state subsidies requires in-depth restructuring, to address the problems that prompted the need for state rescue. Kroes stated that she is confident they can find a solution in that difficult case.
The European Commission has extended its in-depth investigation into a support package in favour of the German Hypo Real Estate Group (HRE). The extension is necessary in order to examine additional restructuring measures which Germany has carried out or intends to carry out in the future. The extension of an investigation is common for restructuring cases and does not prejudge the outcome of the procedure.
Competition Commissioner Neelie Kroes said: “In order to cover the additional restructuring measures for Hypo Real Estate, the Commission has extended its in-depth investigation. I am confident that we can find a solution in this difficult case."
HRE has its headquarters in Munich, Germany. It has a balance sheet of around €390 billion. It is composed mainly of Hypo Real Estate Holding AG, Deutsche Pfandbriefbank AG and the Irish DEPFA Bank plc.
In October 2008 HRE group was severely affected by the financial crisis and benefitted from several state support measures. Capital injections, acquisitions of shares, as well as a squeeze-out of remaining minority shareholders led to the bank going into full public ownership in October 2009.
The award of significant state subsidies requires in-depth restructuring, to address the problems that prompted the need for state rescue. On 1 April 2009 Germany submitted a restructuring plan for HRE to the Commission. According to the plan, which was modified subsequently, HRE intends to concentrate it activities on commercial real estate finance and public sector finance and to reduce its activities drastically.
As HRE modified its restructuring plan before the Commission had completed its assessment, the scope of the investigation has now had to be adapted to cover the additional restructuring measures.
The detailed investigation focuses on the evaluation of the bank's ability to restore its long-term viability and whether sufficient measures are taken to minimise distortions of competition.
© European Commission
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