Germany's finance ministry in crisis talks
|
Germany's finance ministry is locked in crisis talks as commercial property lender Hypo Real Estate teeters on the verge of collapse.
A £30 billion rescue package fell over on the weekend, with some experts predicting the firm will become another victim of the credit crunch before trading starts on Monday morning.
Under the terms of the original bailout, a consortium of German banks were to provide a line of liquidity worth over £5 billion.
The banks were never identified, but the government said they all were German.
Hypo was the first German blue chip to seek a government rescue after running into trouble in mid-September as credit froze on international markets.
Hypo, the country's second largest commercial property lender, said on Saturday that the rescue plan had fallen apart after private lenders withdrew support, a key element to the proposal that had already been approved by the EU earlier this week.
German media reported that the consortium apparently got cold feet after an examination of Hypo showed that losses could be as much as £40 billion by the end of 2008.
The emergency meeting came a day after Europe's four major economic powers called for tighter regulation in a bid to stop the fiscal bleeding wrought by turmoil on Wall Street.
Germany, France, Britain and Italy have however shied away from US style rescue deal, following Congresses eventual approval of a $700 billion package.
© Independent Television News Limited 2008. All rights reserved.
