Steinbrück: Berlin not mulling nationalizing banks - for now
AFP · 9 Oct 2008, 12:49
Published: 09 Oct 2008 12:49 GMT+02:00
"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, Steinbrück said. "But this might change as uncertainties about future developments are currently much too high."
Berlin announced at the weekend a €50-billion ($68-billion) rescue package for Germany's fourth biggest bank Hypo Real Estate (HRE), one of three of the country's banks that have needed help over the past year. But Chancellor Angela Merkel's government has so far not followed other European countries in partly or fully nationalising any of its lenders, such as Britain which on Wednesday pledged £50 billion ($64 billion) to buy stakes in the country's banks.
Steinbrück also said ahead of Friday's G7 meeting of finance ministers that the "most important task of all" was to agree on a relaxation of the accounting procedures that have been blamed for exacerbating the crisis for banks.
This procedure has been blamed for making the financial crisis worse for banks because it forces them to write down on their books the value of assets as soon as they fall. Prices for some assets such as shares have fallen sharply in the recent market turmoil.
"This must be applied in Europe quickly. If possible we should do it for the accounts for the third quarter (which ended on September 30) that will be prepared in the second half of October," Steinbrück said.
The minister also said that the effects of the crisis as a whole on the German economy, Europe's largest, would be "much more evident than we had expected until now."
"The government will have to make a significant cut in its 2009 growth forecast," he said.
The Financial Times Deutschland cited sources close to the government as saying that it will cut its forecast for economic growth next year to between zero and 0.5 percent from the current projection of 1.2 percent. The Economy Ministry declined to comment on the report.
Ireland extends bank guarantees
Ireland extended its blanket guarantee on personal and corporate bank deposits to five foreign-owned banks on Thursday, the Department of Finance said.
In addition to Ireland's six major banks, the guarantee will also apply to Germany's Postbank, Northern Ireland's Ulster Bank, Britain's HBOS, First Active, which is a unit of the Royal Bank of Scotland Group, and IIB Bank, a wholly-owned subsidiary of Belgium's KBC Bank.
Ireland's unilateral deposit guarantee, announced last week, was slammed by European countries as a decision that would distort competition, with Chancellor Merkel describing it as "unacceptable" because it distorted competition.
"Clearly, there will be some additional limitations and safeguards in relation to these operations to ensure that the support provided relates to liabilities arising from their position within the national economy," rather than to their wider group, Irish Finance Minister Brian Lenihan said.