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Germany aims to protect consumer bank deposits

The Local · 31 Jan 2013, 08:12

Published: 31 Jan 2013 08:12 GMT+01:00

The government wants the law to come into effect in January 2014 and banks' activities to be separated by July 2015. It will only apply to institutions with balances sheets over €1.0 billion ($1.3 billion) or with risky positions worth 20 percent of the balance sheet value.

The rules would affect Germany's two biggest banks, Deutsche Bank and Commerzbank, as well as regional banking giant Landesbank Baden-Württemberg


Banking separation is an idea floated by the head of the Finnish central bank and European Central Bank governing council member Erkki Liikanen as a measure for reducing risk in the banking sector.

But one of Deutsche Bank's co-chief executives, Anshu Jain, has repeatedly slammed the idea, saying it would "greatly harm the German economy and German companies."

He argues that if Deutsche Bank can no longer use deposits to refinance its activities in investment banking, the refinancing costs would automatically rise and that would narrow the financing possibilites of major companies.

Story continues below…

At the same time, banks with high deposits would find it difficult to find attractive investments for customers, Jain said.


The Local (news@thelocal.de)

Your comments about this article

11:11 January 31, 2013 by pepsionice
I would offer this advice....banks that deal in investment playing....ought to be called something other than a bank. A bank's standard business should either to be a place where money is kept, loaned out, or used for home purchases....nothing more than that. We've gotten to some point where banks pretend to be lots of things, which they can't really manage.
11:20 January 31, 2013 by Navigator_B
"He argues that if Deutsche Bank can no longer use deposits to refinance its activities in investment banking ....  that would narrow the financing possibilites of major companies." Deutsche Bank seems to think that it owns those deposits that really belong to its customers and that it has a right to take whatever risks it wants with them without the owners' permission.

"At the same time, banks with high deposits would find it difficult to find attractive investments for customers, Jain said." Yes, like attractive investments using German savers' money a few years ago for overpriced property in Ireland, Spain or the US and for government bonds from countries like Greece that can never pay them back.
12:53 January 31, 2013 by Berlin fuer alles
Bolting the stable door after the horse has bolted.

Wasn't it such banks that had a big part in causing house price inflation in Ireland and Spain. German banks could not get away with this in Germany so they became bondholders in foreign banks and proceeded with such risky inflationary tactics in other EU states. Now the citizens of these countries have to bail out these banks and indirectly the German banks. But when ever did big business and banking concerns ever give a fcük about anybody.
13:03 January 31, 2013 by Omufu
Fantastic. The sooner the better. And I agree with pepsionice - very different institutions should have very different names!
13:55 January 31, 2013 by Navigator_B
Let them risk their customers money as much as they want, as long as they call themselves casinos instead of banks.
14:27 January 31, 2013 by raandy
If I want to invest my money into risky investments that is my business.

The banks using our money for risky investments is a bad practice.If the bank makes money on short term risky investments we see nothing as depositors.On the other hand if banks loose your money then the tax payers inevitably will pay for the bailout.

In the US they repealed the Glass-Steagall act in 1999 which prevented commercial banks from investing in the Wall Street Casino.This paved the way for the financial meltdown and the bailouts of 2008.
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