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WORLD> Europe
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Germany agrees bank rescue and guarantees savings
(Agencies)
Updated: 2008-10-06 09:47 Banks that had agreed to shoulder 8.5 billion of that total balked when the new problems came to light, throwing the case back in the government's lap. "The federal government refuses to be forced into some sort of shared responsibility by (HRE) or to put the entire burden of the risks on taxpayers," Steinbrueck said as talks between his ministry, the Bundesbank, financial regulator Bafin and financial institutions began. With a market capitalisation of about 1.5 billion euros, HRE is relatively small compared with other firms in Frankfurt's blue-chip DAX index of leading companies. But its role as a lender for commercial property, infrastructure and government financing makes it a major financial player. It accounts for about a fifth of Germany's 900 billion euro Pfandbrief, or covered bond, market, which is a crucial source of refinancing for the financial sector. Banks in Germany and elsewhere in Europe have been keen for governments to agree a general package for the sector along the lines of the $700 billion bailout agreed in the United States. But Berlin has resisted pressure from other European partners for a European-wide rescue package, saying problems should be handled on a case-by-case basis. German and French officials denied on Sunday that they were set to endorse a common fund to bail out European banks in talks on Monday and Tuesday after Italian Prime Minister Silvio Berlusconi was quoted as saying all three nations would back it. The leaders of France, Germany, Italy and Britain met in Paris on Saturday and issued a statement that made no mention of such a fund. "This was an issue in Paris and there is no need to go over it again," Finance Ministry spokesman Torsten Albig said on Sunday. Asked whether Germany supported the latest Italian proposal, Albig said: "No. Nothing has changed." HRE is the fifth German bank to have been bailed out in the wake of the credit market turmoil. |
