Germany 'finds' billions after error

2011-10-29 16:29
Berlin - Germany is €55.5bn ($78.7bn) richer than it thought due to an accountancy error at the bad bank of nationalised mortgage lender Hypo Real Estate (HRE), the finance ministry said.

Europe's largest economy now expects its ratio of debt to gross domestic product to be 81.1% for 2011, 2.6 percentage points less than previously forecast, it said.

The HRE-linked bad bank FMS Wertmanagement was set up after HRE was nationalised in 2009, so that HRE could transfer the worst non-performing assets to an off-balance sheet bank guaranteed by the German state.

"Apparently it was due to sums incorrectly entered twice," said a ministry spokesperson on Friday, adding the reason for the error still needed to be clarified.

The government nonetheless welcomed the news which pointed to a further reduction of Germany's debt mountain, which remains above the European Union's Maastricht requirement for 60% of GDP.

However, the opposition Social Democrats (SPD) expressed astonishment at the extent of the accountancy error, for which they see the government as responsible.

"This is not a sum that the Swabian housewife hides in a biscuit tin and forgets," said SPD parliamentary leader Thomas Oppermann. "To overlook such a sum is completely irresponsible."

Swabians, from the south-west of Germany, are renowned for their savings skills.

Of the total sum uncovered at FMS, €24.5bn is for 2010 and €31bn is for 2011.

"HRE's bad bank is a state-owned bank for which [Finance Minister] Wolfgang Schaeuble is responsible," Oppermann added.

"He is responsible for the bank being managed and supervised in an orderly way, and this clearly was not the case."

FMS Wertmanagement was created when toxic loans and securities with a face value of €173bn were transferred from HRE in October last year, creating Germany's largest bad bank.

Read more on:    germany  |  economy
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