On Tuesday, the European Commission announced that it has temporarily approved two state guarantees of €8 billion (which will run from December 23, 2009 trough December 22, 2010) and €10 billion for the German bank, Hypo Real Estate. The €8 billion guarantee will run from December 23, 2009 through December 22, 2010, while the €10 billion guarantee will be granted "in the coming months if necessary for urgent liquidity needs." Both guarantees will be issued by the German Financial Markets Stabilisation Fund (SoFFin). The Commission found that the guarantees are an appropriate means to remedy a serious disturbance in the German economy, and that such guarantees are necessary for Hypo to cover urgent liquidity needs. The guarantees approved on Tuesday will be considered in conjunction with previous rescue measures when the Commission makes a final decision on Hypo's restructuring plan.
In November, the Steering Committee of SoFFin announced that it would provide Hypo with an additional €3.0 billion capital contribution and to extend the €52 billion liquidity guarantee facility through June 30, 2010. Earlier this year, SoFFin became Hypo's 90% shareholder after a tender offer and subsequent share authorization, and in October 2009 required the transfer of all minority shareholder interests to the majority shareholder after a year of wrangling with Hypo's largest minority shareholder to obtain full control of the company.