Lacking Buyer, Eurohypo Will Be Discontinued

FRANKFURT-Because a buyer could not be found for the troubled Eurohypo commercial lending division of locally based Commerzbank, the European Commission and the Federal Republic of Germany have agreed today to allow the company to gradually dissolve the business by 2014. The commission and Germany had provided Commerzbank about $24 billion in bailout money in May 2009, with the condition that Eurohypo be sold.

Now, Commerzbank has agreed to separate its core and non-core activities of Eurohypo. The non-core activities will be put in a separate restructuring unit that will not be allowed to write new business, but will concentrate on the winding down of the business. Commerzbank will be allowed to continue commercial real estate activity in Germany, France, Poland and the United Kingdom with a limit of $33 billion, or $6.7 billion of new business volume, until Jan. 1, 2016.