Germany's news in English

Editions:  Europe · Austria · Denmark · France · Germany · Italy · Norway · Spain · Sweden · Switzerland

EU commissioner calls German banking system 'outdated'

Share this article

EU commissioner calls German banking system 'outdated'
Photo: DPA
17:09 CEST+02:00
The European Union's top competition regulator hit out at Germany's "outdated" banking system on Wednesday, calling for urgent reforms to help get the European economy back on track.

"The German model of three pillars - private banks, cooperatives and (state-owned) savings banks - is outdated," EU Competition Commissioner Neelie Kroes told the Süddeutsche Zeitung daily in an interview.

"It does not correspond at all to the role that the German economy plays and should play," Kroes told the paper. "Europe badly needs a Germany that is back on form."

Germany's state-owned Landesbanken have been major casualties from the financial crisis, forcing many to tap a government rescue package worth €480 billion ($685 billion) for loan guarantees and emergency capital.

EU regulators stripped the Landesbanken in 2005 of state guarantees that had allowed them to borrow more cheaply than privately owned competitors, pushing many to invest in riskier areas of business that went sour last year.

The financial crisis has increased pressure on the Landesbanken, which play a vital role in the German economy, to seek mergers with other lenders in order to cut costs.

 
Jobs in Germany
Get notified about breaking news on The Local

Share this article

The Local is not responsible for content posted by users.
Become a Member or sign-in to leave a comment.

From our sponsors

Four ways to lower your rent in Germany

It's often expats in Germany who find themselves paying unduly high rent, but that doesn't mean you can't get a better deal - even if you've already signed your tenancy agreement.