EU Extends Hypo Real Estate Banking Probe

BRUSSELS (AP) — European Union regulators said Friday that they would extend a probe into the German government takeover of lender Hypo Real Estate to examine whether planned cutbacks will compensate for the competitive advantage it got from large state subsidies.

The European Commission said it needed more time to examine new restructuring measures that Berlin has put forward to avoid distortions of competition — usually selling off units or changing how a company does business.

Last month, it warned that Germany may need to rethink a target to finance half of HRE's restructuring from the banks' own coffers or non-governmental sources because private sources of funding for HRE had dried up.

It also said it would not prevent the payment of the euro6 billion ($9 billion) in capital injections to date while the investigation is ongoing.

The EU's executive must approve government bailouts of banks that neared collapse during the financial crisis last year. It has ordered banks such as Commerzbank and ING to shed units to compensate for the unfair advantage over rivals that they received from state help.