* Half in sovereign debt and half in loans to public sector
* Q1 pretax loss 324 mln eur vs 406 mln year ago
* Loan loss provisions rise to 260 mln euros
(Adds details and background)
FRANKFURT, May 7 Nationalised German property
lender Hypo Real Estate (HRE) [HRXGe.DE] has invested about 80
billion euros ($107.3 billion) in highly indebted euro zone
countries, but does not expect to take a hit from its exposure.
"We see no need for writedowns at present," a company
spokesman said on Friday.
No direct impact on risk-weighted assets resulted from
recent rating downgrades on Greece and Portugal, the lender
added as it released first-quarter results.
Hypo Real Estate has 39.2 billion euros in sovereign bonds
from the so-called PIIGS countries of Portugal, Italy, Ireland,
Greece and Spain.
During the last year HRE reduced its exposure slightly by
allowing bonds to mature.
The lender, which became state property after needing a 100
billion euro bailout, has loaned an additional 41 billion to
local authorities, financial institutions and
government-regulated companies in the PIIGS countries, it said.
Hypo Real Estate said its sovereign bond exposure to Greece
totalled 7.8 billion euros, to Portugal 1.6 billion, to Italy
26.8 billion and to Spain 2.7 billion.
In the first quarter HRE narrowed its losses, benefiting
from lower costs and reduced trading losses.
Its core capital ratio came in at 7.7 percent.
Germany's financial sector will contribute 8.1 billion euros
over three years to round out a 110 billion euro bailout of
Greece, the German Finance Ministry said. [ID:nBAT005421]
(Reporting by Arno Schuetze and Christian Kraemer; Editing by