PLANS FOR a second part-nationalisation of a big German bank this year remained on hold yesterday as officials worked out details of another rescue package for Hypo Real Estate, sources close to the talks said.

Berlin has been discussing taking a stake in stricken investment bank Hypo Real Estate (HRE) in return for more state aid, but the only accord so far has been on providing additional guarantees as a stopgap.

“New guarantees have been agreed and the rest has been postponed,” a source with direct knowledge of the matter said.

The state is already taking a stake of 25 per cent plus one share in Commerzbank, the country’s number two lender after Deutsche Bank, to shore up its balance sheet as it takes over struggling Dresdner Bank.

The source said the German parliament needed to get involved in the HRE discussions because German law may have to be amended to allow the state to go ahead with its stake purchase plans.

Another source said that, given the complexity of the plan, the Munich-based property lender would get additional borrowing guarantees for now before an “overall solution” to Hypo’s woes emerges.

HRE and Finance Minister Peer Steinbrüeck declined to comment on where the talks stood.

Mr Steinbrüeck told reporters at an event in Wesel only that the case was in the hands of the Soffin bank rescue fund set up by the state.

Hypo had to be rescued by a consortium of banks and the German government late last year with €50 billion of credit and a further €30 billion of state guarantees to borrow more.

The bank’s shares have plunged from €33.63 a year ago to as low as €1.85 this month and closed on Friday at €2.08, giving it a market capitalisation below €440 million.

Hypo Real Estate, which has no customer deposits to fall back on, has been hit hard by asset writedowns and problems at its Depfa Bank division.

Hypo’s Depfa Bank division lends to public-sector borrowers. – (Reuters)