The charges, which came after Gitic, a Chinese development bank, defaulted on an $8.75m bond interest payment to the US bank Chase, rekindled worries about the financial positions of European banks, which are heavy lenders to Asia. It is the first Chinese default since 1949.
HypoVereinsbank had been seen as one of the safer European banks because the bulk of its business is in the relatively secure German mortgage and commercial property market.
Yesterday's bad news has called into question the tentative recovery in confidence in the banking sector where shares have clawed back at least half of the 60 per cent fall in some share prices, which followed the financial crisis in August and September.
The provisions at HypoVereinbank overshadowed a solid 10 per cent rise in nine-month profits. HypoVereinsbank's provisions relate to investments in East Germany made at the height of reunification in 1993.Reuse content