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Viewing cable 08DUSSELDORF24, ANOTHER DUESSELDORF-BASED BANK RESCUED

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Reference ID Created Released Classification Origin
08DUSSELDORF24 2008-04-24 14:51 2011-08-24 01:00 UNCLASSIFIED Consulate Dusseldorf
VZCZCXRO7066
RR RUEHAG RUEHAST RUEHBW RUEHDA RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHDF #0024 1151451
ZNR UUUUU ZZH
R 241451Z APR 08
FM AMCONSUL DUSSELDORF
RUEHC/SECSTATE WASHDC 0141
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNFRG/FRG COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHDF/AMCONSUL DUSSELDORF 0157
UNCLAS DUSSELDORF 000024 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV GM
SUBJECT: ANOTHER DUESSELDORF-BASED BANK RESCUED 
 
 
Sensitive but Unclassified -- Not for Internet Distribution 
 
1.  (SBU) After German state institutions intervened in 2007 to 
save the well known WestLB and IKB banks, the "Duesseldorfer 
Hypothekenbank" (DHB), this week also required a rescue 
operation.  In a "forced sale" on April 21, a fund controlled by 
the German Association of Private Sector Banks (BdB) took over 
this little known family-owned private bank with 27 billion 
euros in assets.  The Managing Director of the Association's 
North Rhine Westphalia (NRW) branch told us that BaFin and the 
Bundesbank became heavily and directly involved in order to 
preserve the integrity and reputation of the German "Pfandbrief" 
market, which in turn plays an important role in real estate 
financing and municipal finance markets.  The bank's collapse 
could have undermined confidence in these two key markets. 
(Note: Pfandbriefe are covered bonds, a special form of mortgage 
backed security that has been issued in Germany for more than 
100 years and are considered "ultra safe."  They are a central 
product in German capital markets.  End Note) 
 
2.  (SBU) Our BdB interlocutor saw little direct relationship 
between this case and U.S. subprime woes.  According to the 
Fitch rating agency, the capitalization of DHB was "barely 
adequate," despite a 150 million euro capital injection earlier 
this year by the former owner, the Schuppli family.  Our 
interlocutor speculated that downgrades by rating agencies 
triggered the crisis at DHB.  This in turn affected the bank's 
liquidity (although a DHB Director denied to the press that this 
was the problem).  Our BdB interlocutor called the rescue 
operation "serious, but not of the same dimension as the crises 
at WestLB, IKB or SachsenLB."  The BdB takeover of DHB is only 
temporary and that a sale is expected as soon as an appropriate 
buyer can be found, he stated. 
 
3.  (U) This message was coordinated with Embassy Berlin. 
 
BOYSE