GERMANY’S FINANCE ministry has denied knowing as early as last March that troubled property lender Hypo Real Estate (HRE) faced serious financial difficulties.
The Munich-based company posted a higher-than-expected third-quarter pretax loss of €3.1 billion yesterday, mainly due to €2.5 billion in writedowns from Dublin-based subsidiary Depfa – half the amount it paid for the company last year.
The collapse of Lehman Brothers and Icelandic investments contributed a further €600 million of red ink, said a spokesman for the firm, which was rescued from collapse last month with a €50 billion liquidity package from the government.
Yesterday, it emerged that the Bundesbank informed the Berlin finance ministry in March that it had sent six auditors to Dublin at the end of February to examine Depfa’s books.
After preliminary reports filed in March, April and June, a full report was prepared in August and sent to the finance ministry.
A ministry spokesperson confirmed yesterday that the report was filed by the section chief rather than forwarded to minister Peer Steinbrück or any of his top advisers.
“There was no reason for political intervention,” said the spokesperson. “There were no indications of anything which, in the case of HRE, would have made preventative measures necessary.”
But opposition members of the Bundestag finance committee said the revelation was another part of a “chronicle of failure” over HRE.
“Overall, the market environment remains difficult,” said the bank in a statement.
“The costs of the €50 billion liquidity facility and the restructuring will also impact on results for 2009.”
