German banks prop up property lender, plan sale

FRANKFURT, April 21 (Reuters) - Germany's BdB banking association has taken control of property lender Duesseldorfer Hypothekenbank (DUOGg.F) and plans to sell it, after the lender ran into problems linked to the financial market crisis, the BdB said on Monday.

The bank's owners decided to temporarily transfer the lender to a guarantee fund run by the banking association, the BdB said in a statement.

"A new owner will be found for the bank in an orderly sale. That will allow the bank to get through the difficulties that it had run into in the current tense market situation," the statement said, adding that the bank's ability to service its covered bonds was secure.

The BdB said German financial watchdog BaFin and the country's central bank were informed of the transaction but regulatory action was not needed because the bank's owners had acted responsibly.

Duesseldorfer Hypothekenbank, which has total assets of about 27 billion euros ($42.84 billion), is the second German bank this month to run aground in the credit market storm.

Small lender Weserbank closed its doors earlier this month, making it the first European bank fatality since the onset of the global credit crunch, though other German banks, mainly from the state sector, had to be rescued last year.

Duesseldorfer Hypothekenbank mainly focused on lending to government authorities and public-sector banks but also conducted large-volume lending for commercial real estate, according to its website.

It did not engage in retail banking or lending to single-family homeowners, it said. (Reporting by Jonathan Gould, editing by Richard Chang)