Hypo Real Estate

About Hypo Real Estate

Hypo Real Estate, Germanys second largest commercial property lender, collapsed in September 2008. Hypo had relied on short term wholesale funding to finance long term loans. Depfa, Hypos Irish subsidiary, could not roll over debt. The German government provided multiple rescue packages totaling 102 billion. SoFFin, the German financial market stabilization fund, took over Hypo in 2009. The company was nationalized. Hypo was renamed FMS Wertmanagement and wound down toxic assets. The cleanup cost approximately 25 billion. The Hypo collapse was the largest German bank failure of the crisis. The case demonstrated the risks of relying on short term wholesale funding and the vulnerability of commercial property lenders to credit market disruptions.