Hypo Loses $4B in Third Quarter, G20 Summit Lacks Action
- Nov 17, 2008
Commercial real estate woes aren’t limited to the United States. German lender Hypo Real Estate reported Monday a net loss of $4 billion in the third quarter as the financial crises worsened, with a unit in Ireland hit especially hard by write-downs on the values of its assets, the Associated Press reported. The Munich-based bank, which got a $63 billion bailout from the government last month, said it wrote down $3.1 billion in the third quarter and that it foresees “further negative impacts on earnings in the fourth quarter of 2008 and in 2009.” The Munich-based company had already said earlier this month that it expected to lose billions on its stake in the Irish bank Depfa Bank PLC, which it bought in 2007, according to the Associated Press.While Hypo struggles, Dubai Group – an investment company managing more than $40 billion on behalf of Dubai’s ruler – plans to buy stakes in U.S. real estate and asset management companies in a bid to profit from low prices, Bloomberg reported. Dubai Group, which has already spent as much as $3.5 billion in the U.S., is focusing on the world’s biggest economy because it has the potential to recover quicker from the global financial crisis than Europe, the company’s chairman said over the weekend at a conference in Dubai. The financial world is still focusing on the auto industry and its failing health. General Motors Corp. sold its remaining 3 percent stake in Japan’s Suzuki Motor Corp. on the open Tokyo stock market for about $230 million, according to the Wall Street Journal. GM said the move was “based on a mutual agreement,” while the Japanese compact-car maker said it was mindful of GM’s need to secure funds as it reels from a slump in auto sales in its major markets and high operating costs. This week, Congress will consider whether to cough up billions of dollars to bail out automakers, CNNMoney stated. General will likely file for bankruptcy without a large cash infusion by the end of the year, according to the article. The company ended the third quarter with about $16 billion on hand, but it needs $11 billion to $14 billion to continue normal operations. It burned through $7 billion in the third quarter. The G20 weekend summit of world leaders aimed at tackling the global financial crisis — and preventing future debacles — was a disappointment as the meeting was high on symbolism but low on action, according to the Associated Press. The leaders from 21 participating nations put off many hoped-for concrete goals until their next meeting, to be held in late April. The leaders supported the benefits of enacting government spending to stimulate their economies,but stopped short of a commitment for all to act at the same time, Associated Press article stated.