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Brussels - The European Commission on Friday ordered a fresh probe into state aid for nationalised German bank Hypo Real Estate, the latest in a long series of reservations.
Brussels said in a statement that an extension to an existing investigation "is necessary in order to examine additional restructuring measures which Germany has carried out or intends to carry out in the future".
Nevertheless, the commission found capital injections of approximately €6bn "temporarily compatible" with European state aid rules awaiting "a final decision on the restructuring plan".
And the European Union's top competition enforcer Neelie Kroes said she was "confident that we can find a solution in this difficult case".
The commission announced in May an in-depth investigation into some of the more than €100bn ($135bn) offered by Germany for the bank.
Germany gained EU approval for a first tranche of aid for HRE worth €35bn in October 2008, and Berlin has since notified Brussels that further measures are necessary.
HRE specialised in providing cheap funding to local governments but the seizing up of short-term money markets where it previously raised funds all but destroyed its business model and left it unable to finance its huge debts.
The commission statement said it wanted to establish "the bank's ability to restore its long-term viability and whether sufficient measures are taken to minimise distortions of competition".
HRE on Wednesday reported a net loss of €574m ($860m) in the third quarter of 2009, a strong improvement from its loss of €3bn in the same period a year earlier.
German authorities, fearing that the bank's collapse would trigger financial market chaos, ordered this year the first full bank nationalisation since the republic's birth in 1949.
The government deemed the bank critical to Europe's biggest economy because it plays a major role in the issuance of "Pfandbriefe," bonds in which small investors, savings banks and insurance companies have placed large sums.
- AFP