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| Hypo Real Estate reports $1.08 billion 2Q loss |
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| Written by The Associated Press |
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The government moved to nationalize the lender after shoring it up with hefty loan guarantees. It currently holds about 90 percent of Hypo Real Estate and is expected to complete nationalization this fall. It has not nationalized any other banks, although it has taken a 25 percent stake in Commerzbank AG. Munich-based Hypo Real Estate, which lost euro382 million in this year's first quarter, had warned in June that risk provisions would again lead to a "significant" burden on earnings in the second quarter. The bank said its operating results also were hit by costs of euro257 million in the first half related to liquidity support provided to it by the government's financial-sector rescue fund. Operating revenues improved to euro348 million in the second quarter from euro236 million a year earlier. However, they were lower over the year's first half, dropping to euro268 million from euro420 million. Net commission income slipped into the red, showing a second-quarter loss of euro99 million and a first-half loss of euro207 million. Last year, Hypo Real Estate earned euro34 million on commissions in the second quarter and euro69 million in the first half. For the January-June period, Hypo Real Estate's net loss was euro1.13 billion. In last year's first half, it had a net profit of euro160 million. First-half loan loss provisions ballooned to nearly euro1.08 billion from euro70 million a year earlier. The bank said nearly all of those provisions — some euro1.05 billion — were related to real-estate loans, with infrastructure and public-sector financing accounting for the rest. It blamed "the further deterioration in regional economic conditions, particularly in the markets of North America, Southern Europe and Great Britain ... as well as in some segments in Germany." Hypo Real Estate said its core capital ratio — a key measure of a bank's health — improved to 6.9 percent at the end of June from 3.4 percent on Dec. 31. Its total assets declined by 8 percent during the first half, falling to euro386.4 billion from euro419.7 billion. The Associated Press |
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