According to the association of German banks Bundesverband deutscher Banken (BdB), the lender got into difficulties following its exposure to bonds of the Austrian Heta Asset Resolution AG.
The takeover was approved by the responsible bodies of BdB, which runs the fund, and clears the way for its existing owner, the US-based financial investor Lone Star.
BdB general manager Michael Kemmer said: "The takeover guarantees that the bank will continue to operate in the interests of its customers and financial stability."
Previously, the Deposit Protection Fund said in a statement that it is providing guarantees for the bonds.
BdB, which will run the fund, however, plans not to close the bank, but continue its operations, Reuters reported.
The associations’ latest decision means the sale of the real-estate lender Duesselhyp by Lone Star to a consortium of investors will not go through and further marks for the second time that it is saving Duesselhyp, following an initial bailout in 2008.
Recently, Austria’s Financial Market Authority has refused to issue fresh capital to Heta Asset Resolution, which was set up in 2014 from the remaining assets of defunct lender Hypo Alpe-Adria-Bank International.
According to the Finance Ministry, Heta has already cost Austrian taxpayers about €5.5bn ($6.2bn) and may require an additional €7.6bn.
