Germany's Hypo Real Estate plans to slash 1,000 jobs

Berlin: Troubled German lender Hypo Real Estate Holding AG on Saturday announced plans to cut about 1,000 jobs, more than half its current work force, by 2013 as it cuts costs following a government-backed rescue.

Hypo Real Estate said it would reduce the number of employees from nearly 1,800 to about 1,000 over the next three years, with two-thirds of those jobs outside Germany.

It said a further 200 jobs would go by 2013.

The commercial property lender, which said part of the cuts would be achieved through outsourcing and divestments, said it expects to reduce its annual costs by some 200 million euros (about Dh1,022 million) by 2011, and by 250 million euros by 2013.

Short-term funding

Hypo Real Estate also said it was terminating the contracts of two former managers, including former chief executive Georg Funke, and two current managers. The company ran into trouble in mid-September after its Dublin-based unit Depfa Bank plc failed to attract short-term funding amid the widening credit crunch.

The German government put together a rescue package worth 50 billion euros. Hypo Real Estate later turned to a separate financial sector rescue fund set up by the government for further loan guarantees.

The company has now "taken necessary steps paving the way for its return as an active market participant in the medium term," Chief Executive Axel Wieandt said.

"The focus is now on discipline in managing the balance sheet, as well as costs and risks, and on consistently implementing the restructuring measures," Wieandt said.

Hypo Real Estate said its restructuring drive would incur one-time costs of 400 million euros, about two-thirds of that in the fourth quarter.