Hypo rescued, Germany guarantees deposits

6 October 2008

German financial firm Hypo Real Estate has apparently been rescued from collapse, after an 11th hour government-backed deal.

Private banks and insurers have agreed to help the authorities in a $68 billion bailout.

A previous offer to buy up Hypo from a consortium of banks had collapsed - and ministers had rushed to find a solution to save Hypo before the markets opened on Monday, in a bid to avoid further volatility.

"With this mutually agreed solution, the institution will be stabilized and with it, Germany strengthened as a place to conduct finance in difficult times," the German finance ministry said in a statement.

In order to shore up consumer confidence in the financial services sector, the European nation has moved to offer a 100 per cent guarantee on savings deposits.

It follows Ireland and Greece in this action - aimed at boosting consumer confidence in banks.

German chancellor Angela Merkel has previously said that she would "pull out all the stops" to rescue Hypo.

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