Brüderle demands banks boost business lending

German Economy Minister Rainer Brüderle pressed banks on Wednesday to increase lending as the government named a "credit mediator" to boost the number of business loans.

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Brüderle urged banks to "fulfill their duties" to the wider economy in an interview with the public television channel ZDF.

"Taxpayers extended generous aide to help you avoid bankruptcy," he said in reference to massive state aid extended to the troubled banking sector a year ago.

Financial institutions now had ample leeway to increase lending, Brüderle added.

His ministry later announced that Hans-Joachim Metternich had been named as a credit mediator to help Germany's small and medium-sized enterprises obtain loans needed to fund their operations.

Metternich would work in Frankfurt and be charged with "compiling complaints from companies seeking external funding and finding constructive solutions with credit institutions," a statement said.

France has already created such a position "with great success," Brüderle noted.

Metternich is currently head of the public investment bank for the western German state of Rhineland-Palatinate, and would begin examining cases in March, the ministry said.

Meanwhile, a summit was planned in Berlin later on Wednesday with representatives from companies, federations and unions to discuss the threat of a credit crunch in Europe's biggest economy.

Brüderle and Chancellor Angela Merkel have both warned that a generalised credit crunch was possible next year.

Capital Economics economist Jennifer McKeown noted that in its last Financial Stability Report, the German central bank said German banks might still have to write off €90 billion ($135 billion) in losses on loans and securitised instruments. That would imply "that the sector is not even halfway through its potential losses," McKeown said.

But Commerzbank, the second-biggest German bank in which the state now holds a stake of around 25 percent said it would do its part to help firms out.

"We are going to take medium-term perspectives into greater consideration," and raise loan offers by €5 billion in January, Commerzbank head Martin Blessing told the business daily Handelsblatt in an interview.

"Even if the situation is tough in 2009 and 2010, if companies have a positive fundamental perspective we will be able to extend credit."

German savings banks were also set to create a joint fund with €5 to 10 billion, the head of their federation Heinrich Haasis told the Frankfurter Allegemeine Zeitung newspaper.

Haasis said the biggest problem in certain regions was to raise enough funds for big loans to large enterprises.