Berlin hopeful of avoiding nationalization for troubled bank

Angela MerkelBerlin - German Chancellor Angela Merkel's government still hopes to avoid a complete nationalization of troubled mortgage lender Hypo Real Estate (HRE), a Berlin spokesman said Monday.

The government believed that a complete state takeover of a bank would be the final resort in efforts to help stabilize a financial house under pressure, government spokesman Ulrich Wilhelm said.

Speaking on German television over the weekend, Merkel had declined to rule out nationalizing HRE, which has emerged as one of Germany's most high-profile casualties of the financial crisis triggered by the US mortgage market upheaval.

But Wilhelm told the government's regular press briefing that all other possibilities such as the government taking out a majority stake in the bank needed to be exhausted first.

HRE has so far received 102 billion euros (129 billion dollars) in state aid aimed at trying to shore up its balance sheet.

Officials have also been preparing a so-called rescue takeover law, which is due to be considered by the German cabinet on Wednesday.

This is expected to result in the federal government taking a majority stake in the ailing HRE. (dpa)

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