Report: German Bank Troubles Went Undisclosed
October 16, 2008
German authorities were aware of troubles at property financier Hypo Real Estate much earlier than Finance Minister Peer Steinbrueck has said, the business daily Handelsblatt reported on Thursday, Oct. 16.
The financial sector watchdog Bafin launched a special investigation into HRE and its Irish subsidiary Depfa back in February, the newspaper said.
BaFin chief Jochen Sanio had acknowledged as much during a hearing by the German parliament's budgetary and financial committee, Handelsblatt reported.
Denials from finance ministry
Until now, Steinbrueck has maintained that no such investigation was possible because Bafin has no jurisdiction in Ireland.
But, according to the sources quoted by Handelsblatt, Bafin submitted a request to the Irish authorities in February and commissioned the German central bank, the Bundesbank, to carry out the investigation.
Sanio said Bafin presented the findings of the probe to HRE's management in July and had informed the finance ministry of the results on Aug. 7.
Rescue for HRE
The German government was forced to come to the rescue of HRE, the country's fourth-biggest bank, at the end of September, initially with a 27 billion euro ($36 billion) bailout.
But that sum then had to be increased to 50 billion euros as it emerged that the bank's woes were even more serious than previously thought.