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50-billion-euro rescue package agreed for German bank: ministry

October 06 12:05:02 PM, Yahoo News

AFP - The German government, the Bundesbank central bank and market regulators agreed with the banking sector Sunday on a new 50-billion-euro rescue package for stricken bank Hypo Real Estate, the finance ministry said.

On top of a public-private deal last month to extend a 35-billion-euro (48-billion-dollar) credit line to Germany's fourth biggest bank, the financial sector will offer an additional 15 billion euros, the ministry said.

"With this mutually agreed solution, the institution will be stabilised and with it, Germany strengthened as a place to conduct finance in difficult times," it said in a statement after a crisis meeting.

The ministry said the German government's original contribution to the Hypo Real Estate (HRE) bailout plan -- 26 billion euros -- remained unchanged although the package's total value had now risen to 50 billion euros.

The private sector will make up the remaining 15 billion euros.

Earlier Sunday, Chancellor Angela Merkel said her government was scrambling to salvage the HRE rescue after a banking consortium withdrew from the plan.

HRE's announcement Saturday sent shockwaves through Europe's biggest economy.

The rescue bid was the biggest in German history and came after HRE was sucked into the global financial turmoil through its inability to refinance debt, one of many high-profile European emergency cases in the past two weeks.

Officials had raced to reach an accord before Asian markets opened Monday, in the small hours on central European time, fearing a final collapse of HRE and heavy downward pressure on all German banking shares.

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