BERLIN (MNI) – Germany’s upper house of parliament, the Bundesrat
representing the 16 states, on Friday passed a bill that allows for an
orderly insolvency of systemically relevant banks.
The lower house of parliament, the Bundestag, already adopted the
bill last month.
The bill foresees giving the government authority to consign the
systemically significant parts of a troubled bank to a state-owned
“bridge bank” if no other bank is willing to take them over.
This would allow the government to operate the systemic bank parts
and liquidate the non-systemic parts without causing turbulence in
financial markets.
In order to finance the unwinding of troubled systemic banks, the
bill foresees the creation of a bank restructuring fund, which is to be
administered by the government’s Financial Market Stabilisation Agency
(FMSA).
The financing for the fund is to come from the banking sector
itself. The bill stipulates that banks will have to pay a levy depending
on their size, systemic risk and degree of integration in financial
markets.
The exact amount of the annual fees will be determined in a
statutory order by the federal government after consulting with the
Bundesbank. The volume of the restructuring fund is to grow over the
years to some E70 billion.
Government officials have said that they expect the bank dues to
amount to around E1 billion to E1.3 billion per year. The money is not
to be used to counter the fallout from the current crisis but only for
future incidents, they stressed.
The bill allows the government to grant the fund a loan of up to
E20 billion and credit guarantees of up to E100 billion should the money
in the restructuring fund not suffice in a future crisis.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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