DGAP-Adhoc: Hypo Real Estate Bank AG:Hypo Real Estate Group decides upon strategic realignment and restructuring; Q4 results expected to be burdened further


Hypo Real Estate Bank AG / Strategic Company Decision/Quarter Results

20.12.2008 

Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
---------------------------------------------------------------------------

Munich, 19 December 2008 – Hypo Real Estate Holding AG: Hypo Real Estate
Group decides upon strategic realignment and restructuring
•Sustainably aligning the business model to changed market conditions 
•Group to reposition itself as a specialist for Real Estate Finance and  
 Public Sector Finance, in Germany and Europe, funded through Pfandbrief  
 issuance
•Reducing the Group's cost base, streamlining its structure
•Q4 results expected to be burdened further

The Management Board and Supervisory Board of Hypo Real Estate Group have
decided upon the strategic realignment and restructuring of the Group. The
company will adapt its business model to the profound changes in the
capital markets environment, and to the growing challenges in the real
estate business. This restructuring is also a prerequisite for the support
measures already provided by the Federal Republic of Germany, and for
further support to be extended by the German Financial Markets
Stabilisation Fund (SoFFin), which is required for the company's continued
existence.

The objective of the strategic realignment is to reposition Hypo Real
Estate Group as a leading specialist for real estate and public-sector
finance in Germany and Europe, with a funding strategy focused on
Pfandbrief issuance. The structural cost base will be reduced, and the
balance sheet structure and risk profile enhanced. The Group plans to
further simplify its structure. The corresponding measures will be
implemented over the next three years.

Discussions with SoFFin regarding extensive support measures are
continuing.

Business model and re-positioning
In the Commercial Real Estate Finance business segment, the Group will be
positioned as a business partner to real estate investors in Germany, key
European markets, and the US. New business in this segment will be
generated from the Group's offices in Munich, London, New York, and Paris.

In the Public Sector Finance business, the Group will henceforth
concentrate on the selective origination of primary business in Europe
eligible for inclusion as cover assets for Pfandbriefe, and on managing the
existing portfolio. The segment's office locations will be centralised to
reflect this adjusted focus.

No new business is planned in infrastructure finance. Capital markets and
trading activities that are no longer in line with the business model will
be discontinued. A sale of non strategic-activities is being considered.
The Group will continue its client-related derivatives business.

Cost base and Group structure
The changes to the business model will be accompanied by reductions in
annual costs of approx. EUR 200 million by 2011, and approx. EUR 250
million by 2013.
The number of employees will be reduced over the next three years, from its
current level of close to 1,800 to around 1,000. Two-thirds of affected
positions will be located outside Germany. An additional 200 redundancies
will occur until 2013, once the planned IT investment programme has been
completed.

Following the merger of Hypo Real Estate Bank International AG into Hypo
Real Estate Bank AG, it is intended to merge DEPFA Deutsche Pfandbriefbank
AG into Hypo Real Estate Bank AG as a next step.

Additional burdens on Q4 results
The realignment and restructuring of Hypo Real Estate Group will involve
total non-recurring expenditure of approx. EUR 400 million, including
approx. EUR 160 million attributable to IT investments. Around two-thirds
of the aggregate EUR 400 million non-recurring expenditure is expected to
be recognised in the Q4/2008 financial statements.
Business conditions on the international credit and real estate markets
have deteriorated further in the course of the current quarter.
Accordingly, Hypo Real Estate Group expects significant additional burdens
to Q4 results, from net trading income and allowance for credit losses
related to real estate finance and structured credit exposures. At least
for the Group and Hypo Real Estate Bank AG a negative annual result is
expected.





Contact:
Reiner Barthuber +49-89-203007-201


DGAP 20.12.2008 
---------------------------------------------------------------------------
Language:     English
Issuer:       Hypo Real Estate Bank AG
              Von-der-Tann-Str. 2
              80539 München
              Deutschland
Phone:        +49 (0) 89 20 30 07 780
Fax:          +49 (0) 89 20 30 07 33 780
E-mail:       info@hyporealestate.de
Internet:     www.hyporealestate.com
ISIN:         DE0008084047, DE0008127200, DE0008127218, DE0008127226, DE0005463251, XS0303478118
WKN:          808404, 812720, 812721, 812722, 812404, 546325, A0NXMH, Eine vollständige Übersicht der Eigenemissionen der Hypo Real Estate Bank AG (ISIN, Börse,Segment) finden Sie unter:, http://www.hyporealestate.com/7923.php
Listed:       Regulierter Markt in München, Düsseldorf, Luxembourg,
              Stuttgart; Foreign Exchange(s) London, Paris, SWX
End of News                                     DGAP News-Service
---------------------------------------------------------------------------