Berlin - Germany's government and top banks were injecting billions of euros Monday into a troubled mortgage lender, Hypo Real Estate (HRE), as it teetered on the brink of collapse. 

The German Finance Ministry in Berlin said HRE would need a guarantee totalling 35 billion euros (50 billion dollars). 

A ministry spokesman said the commitment was needed so that banks could bail out HRE, but the actual losses were not that high. 

Sources said the commitment could potentially strain Chancellor Angela Merkel's federal budget. Germany's parliament would have to vote on the bailout package. HRE is the first major German casualty of the current worldwide financial crisis. 

HRE said in Munich that a consortium of banks came to its rescue overnight as it faced a refinancing squeeze, extending credit to tide over the problems. HRE did not name the banks or disclose the size of the bailout. 

As trading began on the Frankfurt Stock Exchange, HRE shares plunged 63 per cent to 4.95 euros, dragging down other banks. 

HRE had earlier been in urgent talks with German banking regulator BaFin and the Finance Ministry seeking a solution. 

Germany's second-biggest commercial-property lender, a blue chip among the 30 top companies in the DAX stock index, had fallen victim to speculation by its Dublin-based unit Depfa, which specializes in loans to local governments in Germany. 

Depfa had pursued long-term projects with heavy loans and generally ensured refinancing only at the last minute. It was caught short when it could not raise sufficient short-term money. 

HRE, which also lends money for commercial and industrial property, said it had entered into talks with the banks "in response to the extremely challenging conditions on the international money markets following the Lehman collapse and other market disruptions." 

Commerzbank, Germany's number-two bank, said it had already secured all the refinancing it needed this year and had no desire to take over HRE. Commerzbank stock dipped up to 25 per cent Monday before clawing back some ground. (dpa)