Tags: EU | Germany | Bank | Fund

Germany Plans Bank Levy to Cover Costs of Future Crises

Monday, 22 Mar 2010 11:26 AM

The German government plans to introduce a levy on banks to ensure that they pay for the costs of any future crises, sparing taxpayers, officials said Monday.

Leaders of Chancellor Angela Merkel's coalition agreed that "banks cannot in future gamble at the taxpayer's expense," Volker Kauder, the parliamentary leader of her conservative bloc, told ZDF television.

They decided that "provisions must be made so that they — if it gets difficult — pay for things themselves," he added.

Finance Minister Wolfgang Schaeuble's spokesman, Michael Offer, said a formal decision by Merkel's Cabinet is expected March 31.

He gave no details of the plan but said the levy would be at a "bearable" level and take into account the fact that some banks are still affected by the crisis. He stressed that it would be designed not to harm banks' ability to hand out credit.

Kauder gave no details on the size of the fund that would result from the levy, but said it would run into the billions of euros.

He said banks that pose a "higher systemic risk," for example with their own trading operations, would be asked to pay more than others.

Last week, the Association of German Banks, which represents private-sector banks including Deutsche Bank AG and Commerzbank AG, said it would support a privately financed but state-controlled stabilization fund that could intervene in future to rescue or wind up troubled lenders.

The Federation of German Industries said it was "legitimate" for the government to seek to involve banks in the costs of saving and stabilizing financial institutions.

"However, this must not be to the detriment of the real economy in that credit conditions are worsened," senior federation official Werner Schnappauf said. "That would be counterproductive in view of a looming credit squeeze for industrial companies."

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The German government plans to introduce a levy on banks to ensure that they pay for the costs of any future crises, sparing taxpayers, officials said Monday.Leaders of Chancellor Angela Merkel's coalition agreed that banks cannot in future gamble at the taxpayer's...
EU,Germany,Bank,Fund
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2010-26-22
 

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