Germany finds extra 55bn euros after accounting error
- 28 October 2011
- From the section Business
Germany has found itself 55bn euros ($78bn; £48bn) richer after discovering an accounting error at Hypo Real Estate (HRE), the troubled bank it nationalised in 2009.
The country now expects its ratio of debt to GDP to be 81.1% for 2011, 2.6 percentage points lower than previously forecast, the finance ministry said.
The miscalculation was at the so-called bad bank of HRE, FMS Wertmanagement.
The discovery was made earlier this month but only announced on Friday.
FMS will contribute about 161bn euros to Germany's debt this year, compared with 216.5bn in 2010.
HRE faced a severe liquidity shortage in the wake of US banking giant Lehman Brothers' bankruptcy in 2008.
The German government provided the bank with capital injections of 10bn euros and liquidity guarantees amounting to 145 billion euros before nationalising it.
This summer, the European Commission approved 175bn euros of aid to HRE in return for major cuts in its activities.
HRE will phase out all of its businesses except in its core bank Deutsche Pfandbriefbank.