Friday October 10, 05:31 PM
Berlin working on British-style banking bailout: report
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BERLIN (AFP) - Germany is working on a plan to partially nationalise its banks along the lines of a similar British move this week, daily Die Welt said on Friday without saying where it got the information.
The plan involves a capital injection of over 10 billion euros (13.5 billion dollars) in return for equity stakes in the banks and more than 100 billion euros to guarantee loans between banks, the newspaper said in a pre-release of an article to be published on Saturday.
Chancellor Angela Merkel's cabinet will decide on the plan in the coming days although there is considerable opposition from within Merkel's conservatives, who are in coalition with the centre-left, the paper said.
A German government spokesman declined to comment on the report.
Britain said Wednesday it would make 50 billion pounds (64 billion euros, 87 billion dollars) of taxpayers' money available to buy shares in the country's banks in return for fresh capital.
The three-part British package also makes available 200 billion pounds in short-term loans and another 250 billion pounds to guarantee loans between banks.
Germany this week put together a 50-billion-euro rescue of Hypo Real Estate (Xetra: 802770 - news) , the country's fourth biggest bank, but this took the form of guaranteeing badly needed credit lines rather than a nationalisation.
According to Die Welt however, what it calls a "dramatic" deterioration of the situation among German banks involving "serious" liquidity shortages has caused a re-think in Berlin.
German Finance Minister Peer Steinbrueck, currently in Washington for crisis talks with global finance chiefs, said this week that Europe's biggest economy did not need to nationalise any of its banks -- but that this could change if the global financial crisis got any worse.
"So far I don't see the need for state takeovers in Germany because the German banking sector has been hit badly by the financial crisis but less hard" than in other countries, Steinbrueck told the Handelsblatt daily in comments published Thursday.
"But this might change as uncertainties about future developments are currently much too high," he said in an interview.
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