Rescued banks must give something back: Merkel

German Chancellor Angela Merkel said financial institutions that take up the government's 500 billion-euro rescue plan must give something back, as she stepped up calls for pay caps and international market rules.

"This is about protection of citizens, not the protection of banking interests," Merkel told lawmakers in the lower house of parliament, the Bundestag, in Berlin yesterday. "We're offering something and they have to offer something in return." The rescue package is a first step to stabilizing the financial system and will involve limits on compensation and state influence on management decisions, Merkel said. The second "building block for a new financial-market constitution" will require a stronger oversight role for the International Monetary Fund, improved credit-rating companies and less risk with greater transparency in financial products, she said.

Merkel's demand for greater transparency, first made during Germany's presidency last year of the Group of Eight leading industrial nations, will be the subject of a G-8 meeting with developing countries to take place by the end of the year, she said. Japan is the current G-8 president.