BERLIN, September 29, 2008 (AFP) – Berlin has joined a consortium of banks to rescue a stricken property lender, the government said on Monday, in the latest state-sponsored European rescue of a casualty of the US financial crisis.
Berlin has agreed to guarantee a 35-billion-euro (50-billion-dollar) credit line being provided to Hypo Real Estate by a consortium of private banks after emergency talks over the weekend, government spokesman Ulrich Wilhelm said.
“With the decision of the government to cover risks taken by the private banks for the rescue of Hypo Real Estate a spreading of the financial crisis to Germany was prevented,” Wilhelm said following crisis talks over the weekend that carried on late into the early hours of Monday morning.
“In doing this the government is also protecting all the other financial market participants from damages that without the state intervention would have endangered or could have endangered the financial system as a whole,” he told a regular news conference.
“Hypo Real Estate has no private client business, but nevertheless the government by covering the system is meeting its responsibilities to protect the private savings of many people in Germany.”
The rescue, which G