STOCK EXCHANGE ANNOUNCEMENT
12 November 2008
For immediate release
THE FOLLOWING IS THE TEXT OF AN AD HOC ANNOUNCEMENT MADE BY HYPO REAL ESTATE
HOLDING AG FOR RELEASE ON 12 NOVEMBER 2008:
“Negotiations for a EUR 50 billion liquidity facility for HRE Group completed /
Provisional pre-tax loss of approx. EUR 3.1 billion in the third quarter of
2008, including write-offs of approx. EUR 2.5 billion on DEPFA
Negotiations for a EUR 50 billion liquidity facility for Hypo Real Estate Group
completed
Provisional pre-tax loss of approx. EUR 3.1 billion in the third quarter of
2008, including write-offs of approx. EUR 2.5 billion on intangible assets
(DEPFA)
Further negative impacts on earnings expected in the fourth quarter of 2008 and
in 2009
Application for support from SoFFin being prepared
Hypo Real Estate Group and a financial consortium, Deutsche Bundesbank, and the
German Federal Government have finalised the announced EUR 50 billion liquidity
facility, which has been partially guaranteed by the Federal Government. The
relevant legal documentation has been signed, or is ready to be signed. The
funds under the facility will be made available as and from 13 November 2008.
Subject to an extension of the Federal guarantee beyond 31 March 2009, the
liquidity facility has a term maturing on 31 December 2009. In line with EU
regulations, the Federal guarantee will initially have a term maturing on 31
March 2009. Hypo Real Estate Group will approach the Federal Government in due
course in respect of an extension of the Federal guarantee beyond its initial
term.
In accordance with the contractual agreements, the costs of the liquidity
facility will be equivalent to 93 basis points per annum (p.a.) over three-month
Euribor (based on today's reference interest rates). In addition, a debtor
warrant (Besserungsschein) involving costs of a further 90 basis points p.a. on
average has also been agreed which has to be paid over a seven year period on a
cumulative basis to the extent the Group generates a pre-tax profit provided
that payments will be capped at EUR 100 million p.a. in the years 2009-2011, and
at EUR 150 million p.a. in the years 2012-2015.
Hypo Real Estate Group is providing collateral of EUR 60 billion (comprising
loans and securities) to secure the liquidity facility. In addition, Hypo Real
Estate Holding AG has pledged its shares in the Group's operating bank
subsidiaries as collateral for the Federal guarantee.
The negative consolidated loss of Hypo Real Estate Group in the third quarter
2008 arising in the environment of a worsening global financial crises amounts
to EUR 3.1 billion determined on the basis of numbers not finally discussed with
the Supervisory Board. This negative result is largely attributable to the
complete write-off of approx. EUR 2.5 billion of goodwill and other intangible
assets recognised at Hypo Real Estate Holding AG that have arisen as a result of
the first-time consolidation of DEPFA. These are impairments of book values
which do not result in any cash outflows. Since the DEPFA goodwill and the
intangible assets had already been deducted in the past for the purposes of
reporting regulatory core capital, such losses will not reduce Hypo Real Estate
Group's core capital ratio. Further costs totalling approx. EUR 600 million
recognised in income for the third quarter of 2008 were due to various factors,
including the consequences of the collapse of Lehman Brothers, the situation in
Iceland, a further impairment relating to the investment in Babcock & Brown and
other losses in value relating to the CDO holdings of Hypo Real Estate Group. In
addition, in view of the deterioration of the real estate markets, an additional
amount of approx. EUR 100 million in portfolio-based allowances was recognised.
The core capital ratio of the Hypo Real Estate Group (according to BIS rules)
was 6.8 per cent as at 30 September 2008 (including market risk positions, 30
June 2008: 8.2 per cent).
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
including the additional costs for bridging the liquidity shortage until 13
December 2008 by Bundesbank which is being guaranteed by the Federal Government
and the German Financial Markets Stabilisation Fund
(Finanzmarktstabilisierungsfonds, “SoFFin”), as well as expenditure in
conjunction with the necessary restructuring and repositioning of the Group.
Overall, the market environment remains difficult. The costs of the EUR 50
billion liquidity facility and the restructuring will also impact on results for
2009.
Hypo Real Estate Group will postpone the presentation of its complete interim
report for the period ending 30 September 2008 from 12 November 2008 (as
originally announced) to 17 November 2008.
As already announced on 29 October 2008, in addition to the liquidity facility,
Hypo Real Estate Group is seeking further extensive support from SoFFin. This
support is intended to cover both additional liquidity and any significant
capital requirements. The granting of such support by SoFFin forms the basis for
the necessary restructuring and repositioning of the Group. Hypo Real Estate
Group is currently preparing the relevant applications to SoFFin.”
Contact: Julia Hoggett: +353 (1) 792 2004
Issued on behalf of DEPFA BANK plc in respect of its listed bonds.
THE FOLLOWING IS THE TEXT OF AN AD HOC ANNOUNCEMENT MADE BY HYPO REAL ESTATE
| Source: DePfa Bank plc