* SoFFin forced to absorb losses on bank assets
* Writedowns worth 8.9 billion euros on Greece
* SoFFin takes loss on 25 percent Commerzbank stake
(Adds details, background)
By Edward Taylor
FRANKFURT, April 27 Germany's financial market
stabilisation fund, SoFFin, posted a loss of 13.1 billion euros
($17.4 billion) for last year - one of the largest in German
financial history - hit by writedowns on Greek debt and losses
on stakes in Commerzbank and WestLB.
Technically SoFFin is not a bank, so the loss cannot be
directly compared with other large German bank losses such as
Dresdner Bank's 6.18 billion euros net loss in 2008.
But the results, which were published on Friday, show that
losses from the German banking system continue to surface years
after bailed out banks have returned to profitability.
Dresdner Bank was eventually absorbed into Commerzbank,
which itself posted a net profit of 638 million euros in 2011.
Germany established the SoFFin in October 2008 in an attempt
to restore confidence to its financial sector after a raft of
banks, including Hypo Real Estate, IKB and SachsenLB, ran into
trouble. It allowed these lenders to transfer some assets into
"bad banks" guaranteed by the German state.
By removing toxic assets from their balance sheets and
getting capital injections, lenders have been able to return to
profitability, a benefit mainly to shareholders and bank
The SoFFin loss will add fuel to a fierce debate in Europe
over who should shoulder the cost of cleaning up the financial
system. Spain is preparing to force the banking sector, not the
government, to assume the cost of any unprovisioned losses on
real estate assets after they are moved into a special holding
company, a government source said on Friday.
By contrast, Germany nationalised its biggest real estate
lender Hypo Real Estate in 2009, in a controversial move which
forced the Government to assume responsibility for further
SoFFin said it was forced to absorb an 11.4 billion-euro hit
from FMS Wertmanagement, an investment vehicle which holds
assets formerly on the balance sheet of the nationalised Hypo
Real Estate. Of this amount, writedowns worth 8.9 billion euros
come from Greek debt.
Further losses were caused by adjusting the value of a 25
percent stake in Commerzbank, the country's
second-largest lender behind Deutsche Bank, as well as a
writedown on a non-voting capital stake in WestLB.
Germany was forced to rescue a raft of lenders between 2007
and 2009, bailing out Hypo Real Estate, WestLB, Commerzbank and
IKB after the collapse of the subprime debt market led to an
inter-bank lending freeze and heavy portfolio losses.
At the height of the subprime crisis, SoFFin was forced to
provide 168 billion euros worth of liquidity guarantees, and
29.4 billion euros worth of capital to seven troubled lenders in
By the end of March 2012 the liquidity guarantees were down
to 11.2 billion euros, SoFFin said on Friday.
Capital injections were cut to 28.2 billion euros by the end
of December 2011, SoFFin said.
(Editing by Greg Mahlich and Dan Grebler)