Germany's government and financial regulators last night agreed a second bail-out package for Hypo Real Estate after the abrupt failure of a first attempt to rescue the property lender.

Angela Merkel, the German chancellor, has pledged not to let the crisis at HRE endanger the country's financial system. A collapse of HRE - which has a €400bn ($550bn, £310bn) balance sheet and is one of Europe's biggest commercial property lenders - would be the biggest bank failure in modern Germany and would have repercussions throughout Europe.