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Ailing European bank tied to B.C. hospital projects

by mike_yvr | November 17, 2008 at 08:59 am

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More trouble ahead for B.C. infrastructure projects?

The Munich-based company reported on Nov. 12 a wider-than- estimated third-quarter loss of 3.1 billion euros ($3.9 billion) after a 2.5 billion-euro goodwill writedown for Depfa Bank Plc. The company sought a 50 billion-euro lifeline last month from Germany's bank-rescue fund to boost liquidity and cover ``significant capital requirements'' after Dublin-based Depfa failed to get short-term funding amid the credit crunch.

Depfa, the source of Hypo's credit crunch woes, is providing the private financing for two major health care projects in B.C. -- the expansion to Royal Jubilee Hospital in Victoria and a new outpatient facility in Surrey. These projects are part of the government's program to privatize the financing and maintenance of public infrastructure through public-private partnerships.

Hypo Real Estate agreed in July 2007 to pay about 5.3 billion euros for Depfa, which specializes in government lending and depended on money markets for funding. Those markets froze up after the bankruptcy of Lehman Brothers Holdings Inc. in September.