Will the German government become defacto shareholder in BC P3s?
The German bank that's involved in the financing of three high profile public-private partnership (P3) projects in British Columbia may be partially nationalized by the German government.
Hypo Real Estate (HRE) through its subsidiary Depfa Bank PLC is providing capital for P3 schemes for the construction of the Royal Jubilee Hospital expansion in Victoria, the Surrey Outpatient Hospital and the Golden Ears Bridge.
Depfa's credit woes late last year forced its parent HRE to seek a massive bailout package from the German government and other banks. HRE is also under investigation by German prosecutors for suspicion of insider trading and is being sued by investors for alleged lack of disclosure of their financial situation.
Depfa is also embroiled in a major scandal in Italy over the financing of municipal bonds.
The German government is considering partially nationalising distressed mortgage lender Hypo Real Estate (HRE), a spokesman for Chancellor Angela Merkel's CDU party told AFP on Wednesday.
"I can confirm there is some thought in this direction," Otto Berhnardt, CDU (Christian Democratic Union) spokesman for financial affairs, said, adding that a decision could be make quickly.
A total of 50 billion euros (66 billion dollars) in cash and another 30 billion euros in loan guarantees provided to the bank so far appears not to have been enough to get its back on its feet.