12 Nov 2008
Nov. 12 (Bloomberg) -- Hypo Real Estate Holding AG, the lender that received a 50 billion euro ($63 billion) bailout last month, said it expects a third-quarter provisional pretax loss of 3.1 billion euros.
The loss includes 2.5 billion euros of write-offs on its holding in Depfa Bank Plc it bought last year for about 5.3 billion euros. Hypo Real Estate said it expects further ``negative impacts'' on its earnings in the fourth quarter and 2009, according to a statement from the company.
The pretax loss exceeds the median estimate of 2.39 billion euros of 10 analysts surveyed by Bloomberg this week. Munich- based Hypo Real Estate was forced to seek a lifeline Oct. 5 in Germany's biggest bailout since World War II.
The lender has said it will have to impair the goodwill of its holding in Depfa following the bailout. The company also expects 600 million euros of writedowns due to the collapse of Lehman Brothers Holdings Inc., an investment in Babcock & Brown Ltd. and losses related to the collateralized debt obligations of Hypo Real Estate, the statement said.
Hypo Real Estate also said today it completed the loan facility, which has been partially guaranteed by the German government. The funds under the facility will be made available from Nov. 13. The company said on Oct. 30 that it received an additional 15 billion euro guarantee to cover short-term cash requirements from Germany's Financial Markets Stabilization Fund.
Facility Costs
``For the fourth quarter, Hypo Real Estate Group expects that results will be negatively affected as a result of the costs of the agreed liquidity facility,'' the company said in the statement. ``Overall, the market environment remains difficult. The costs of the 50 billion euro liquidity facility and the restructuring will also impact on results for 2009.''
Hypo Real Estate is providing collateral of 60 billion euros in loans and securities to secure the liquidity facility, which has a term maturing on Dec. 31, 2009, subject to an extension of the federal guarantee beyond March 31, the statement said.
The company had a core capital ratio of 6.8 percent as at Sept. 30, down from 8.2 percent as of June 30, it said.
Hypo Real Estate, which was scheduled to publish quarterly earnings on Nov. 12 before stock markets open in Germany, said it postponed the release to Nov. 17.
The lender probably had a net loss of 2.35 billion euros, its first loss ever, according to the median estimate of 10 analysts surveyed by Bloomberg earlier this week. That compares with a pro-forma profit of 256 million euros reported a year earlier.
