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

New state programme to aid struggling companies

Share this article

New state programme to aid struggling companies
Photo: DPA
15:10 CEST+02:00
German Economy Minister Karl-Theodor zu Guttenberg has announced a plan to create a €10 billion state fund to help companies in credit difficulties, news magazine Der Spiegel reported Saturday.

The rescue fund is designed to help companies with a healthy business plan who are unable to get credit at struggling banks.

The fund is to be administered by the Kreditanstalt für Wiederaufbau (KfW), a state-owned development bank that offers loans to small and medium-sized companies. According to the plan, the KfW will give credit to a company's normal credit institution to be passed on to the struggling company. This system is meant to bypass the need for new credit assessments.

The KfW is to take on 90 percent of the default risk, while the borrower's bank assumes the remaining 10 percent of the risk.

Part of Guttenberg's plan will also aim to provide extra security for Germany's all-important export industry. The KfW is to buy up export credits in order to improve banks' re-financing prospects. In exchange, the banks must distribute equivalent export credits.

Get notified about breaking news on The Local

Share this article

Become a Member or sign-in to leave a comment.
Advertisement

From our sponsors

Change the world with a master's degree from Sweden's Linköping University

Master's students at world-leading Linköping University (LiU) aren't there simply to study. They solve real-world problems alongside experts in fields that can create a better tomorrow. Do you have what it takes to join them?

Advertisement