Germany’s plan to take new measures for the restructuring of banking group Hypo Real Estate (HRE) prompted the European Commission, on 13 November, to extend its in-depth investigation into aid to the group. The investigation was initially opened on 7 May 2009, under the EU’s state aid rules (see Europolitics3749).

The extension is common for restructurings and does not prejudge the outcome of the case. Neelie Kroes, the commissioner for competition, said she was “confident that we can find a solution in this difficult case”.

HRE (Munich) mainly comprises Hypo Real Estate Holding AG, Deutsche Pfandbriefbank AG and the Irish DEPFA Bank plc. In October 2008, the group was hit by the economic crisis and benefited from several state aid measures. Capital injections, acquisitions of shares and a squeeze-out of remaining minority shareholders led to the bank’s full nationalisation in October 2009. On 1 April 2009, Germany submitted a restructuring plan to the Commission. Under the plan, which was later changed, HRE planned to concentrate its activities on commercial real estate finance and public sector finance as well as significantly reduce its activities. Given that the plan was changed before the Commission had finished its assessment, the investigation has had to be extended to include the new measures.

The Commission has already found the capital injections, amounting to about €6 billion, temporarily compatible with EC Treaty rules on state aid, pending a final decision on the restructuring plan.