Hypo investigation extended

EU competition authorities say extra aid to German bank necessitates larger investigation.

The European Commission said today that it has extended the scope of its investigation into state aid given to the German bank Hypo Real Estate in order to take account of extra support Hypo has received since the Commission began its investigation.

A spokesman for Neelie Kroes, the European commissioner for competition, said the investigation also needed to be extended because the German authorities had amended a restructuring plan for the bank.

The German government submitted a restructuring plan to the Commission in April in which it set out how the bank’s activities would be scaled down to compensate for the aid it had received. The following month, the Commission launched an in-depth investigation into whether the plan was sufficient to ensure that competition would not be distorted.

In October the deteriorating state of the bank’s finances prompted the state to assume full ownership of the bank.

The German government began providing support to Hypo in October 2008, when it gave the bank a €35 billion guarantee.

“I am confident we can find a solution in this difficult case,” Kroes said.

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