Another mortgage lender is rescued in Germany

Article source:

Another mortgage lender is rescued in Germany

Everyone can now breathe a sigh of relief as the German Government has agreed to finance a bail out plan for the country’s second largest mortgage lender, Hypo Real Estate. The swift move by the Government to fund the rescue plan, worth a staggering £38.7 billion, comes at the wake of disastrous events that have recently rocked the entire mortgage market in most of the major European economies.

Just recently for example, giant mortgage lenders in the UK, such as the Northern Rock and the Bradford & Bingley have fallen into the “loving arms” of the Government and others are likely to have to follow suit. Most, if not all of the mortgage lenders have been forced to pull back a large portion of both their residential and their buy-to-let mortgage products.

The German mortgage lender Hypo Real Estate had no option but to turn to the Government after attempts to secure a private bail out arrangement bore no fruit.

Hypo Real Estate has now fallen in the same predicament as other giant mortgage lenders and financial institutions such as Fannie Mae, Freddie Mac and the insurer AIG; as a result this has raised the numbers of firms that have been nationalised, particularly in Europe.

The giant French banking group, BNP Paribas has announced that it is about to purchase a majority 75 percent stake of the mortgage assets of the Belgian and Luxembourg Mortgage Lender, the Fortis Financial Group.

In return, the Governments of Belgium and Luxembourg will have control of a marginal stake in the French Bank BNP Paribas. The Netherlands Government has already taken control of the colossal Fortis Financial Group’s Dutch subsidiary by way of nationalisation.

These are all very clear indications that the current credit crunch being experienced is moving worryingly fast in Europe; whilst the effects are being felt in all manners across the world it is now starting to have a serious impact on the major financial institutions and economies spread across the entire European continent.

In addition, it also shows demonstrates clearly how the mortgage lending market can be very adversely affected in different European countries.

About Hypo Real Estate

Hype Real Estate is started out life in the city of Munich, Germany in October 2003. Hypo Real Estate specialises in finance for the public sector and for commercial real estate. After its acquisition of DEPFA Bank Plc in 2007, Hypo emerged as a leading provider of infrastructure and public finance. Today the banking group manages financial assets worth just under €400 million.

About Fortis Financial Group

The Fortis Financial Group is a global financial institution providing banking and insurance products to commercial, business and personal customers. Comprising Fortis Bank and Fortis Insurance, the financial group provides a range of financial products through its own retail channel, intermediary brokers and financial advisors and through other established partners. Fortis operates in 50 countries across the globe and employs more than 50 thousand staff to manage its operations.

As a result of the credit crunch Fortis has undergone a complete restructuring overhaul. The Benelux based financial group has been split up with the Netherlands and Belgian Governments assuming control of the Fortis Banking and Insurance operations in their respective countries whilst the non-Dutch activities have been bought out by the French banking giant, BNP Paribas.