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German rescue fund takes over Duesselhyp bank after Heta problems
March 15, 2015 / 6:01 PM / 3 years ago

German rescue fund takes over Duesselhyp bank after Heta problems

FRANKFURT, March 15 (Reuters) - Germany’s deposit protection fund is planning to take over the property lender Duesseldorfer Hypothekenbank AG (DuesselHyp), which has run into problems due to its exposure to Austrian lender Hypo Alpe Adria’s “bad bank” Heta.

The German banking association BdB, which runs the fund, is, however, not planning to wind down the bank, but wants to continue its operations.

“The deposit protection fund is granting a guarantee for the Heta bonds to eliminate the immediate risks. The goal is a complete takeover of Duesseldorfer Hypothekenbank,” the BdB said in a statement on Sunday.

Regulators this month took control of Heta and imposed a debt moratorium until May 2016 after an outside audit found writedown needs that blew a hole of up to 7.6 billion euros in its balance sheet. This leaves holders of Heta debt in limbo and facing the prospect of losses.

Heta could still be declared insolvent despite plans to wind it down, the Austrian regulator FMA has said, a move that could hit German banks harder than many of their Austrian rivals.

After regulators took control of Heta, the ratings agency Fitch said last week that DuesselHyp was in urgent need of capital support.

In its 2013 annual report, DuesselHyp said it had 348 million euros ($365 million) in Hypo Alpe Adria debt.

The planned takeover by the BdB also means that a planned sale of DuesselHyp to group of international buyers led by London-based Attestor is no longer being considered, a source familiar with the situation said.

Different sources familiar with the DuesselHyp sale had earlier this week told Reuters the deal could still be closed, subject to some terms being adjusted. ($1 = 0.9531 euros) (Reporting by Arno Schuetze)

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