May 7, 2010 / 7:05 AM / 8 years ago

UPDATE 2-Hypo Real Estate has 80 bln eur PIIGS exposure

* 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 (Reuters) - 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 David Cowell)

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