Regulators approve HRE bank s nationalisation

May 15, 2009 12:00 am

, BRUSSELS, May 15 – EU antitrust regulators said on Friday they had approved Germany’s nationalisation of troubled bank Hypo Real Estate (HRE), ruling that the deal would not threaten competition.

"The (European) Commission concluded that the transaction would not significantly impede effective competition," Europe’s top antitrust watchdog said in a statement.

The German government, through its special purpose vehicle for supporting banks, known as SoFFin, is in the process of nationalising HRE over concerns that its collapse could trigger more market chaos.

HRE specialised in providing cheap funding to local governments but the seizing up of short term money markets where it raised funds last year all but destroyed its business model and left it unable to finance its huge debts.

Although the commission ruled that HRE’s nationalisation would not create antitrust problems, the EU regulator has a separate in-depth investigation of Berlin’s rescue of the bank to check that it does not break state aid rules.


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