German Finance Minister Peer Steinbrueck on
Sunday ruled out the creation of a "bad bank" to take toxic assets
from the nation's major financial institutions, dpa
reported.
Such a bank would need to be funded by at least 150-200 billion euros (198-260
billion dollars) of taxpayers' money, the minister told the newspaper
Frankfurter Allgemeine Zeitung.
"How could I take such a proposal to the federal parliament," he
asked. "The nation would think we've gone crazy."
Josef Ackermann, chief executive of Deutsche Bank, Germany's biggest lender,
has called for such an institution that would allow banks to unload their bad
assets and troubled loans.
Steinbrueck's comments came amid reports that Germany's leading banks and
financial insitutions faced further losses totalling nearly 300 billion euros.
The news magazine Der Spiegel said the figure was based on a survey of 20
leading institutions by the Bundesbank, Germany's central bank, and the
financial watchdog Bafin.
The report said the banks, some of which suffered huge losses at the start of
the credit crunch last autumn, had written off only about a quarter of their
bad assets.
The finance ministry confirmed the survey, but declined to comment on the
figures.
A "bad bank" would enable the ailing banks to make a new start by
soaking up their problem debts and assets. Once the financial situation
normalized the "bad bank" would seek to sell the assets.
But politicians and experts at the government's financial markets stabilization
fund, Soffin, want the banks to bear the losses should the "bad bank"
end up in debt when the markets return to normal.
Germany's ruling coalition has created a 400-billion-euro fund to provide
loans and credit guarantees to financial institutions. It is aimed at restoring
confidence among the banks so that they will resume lending operations to one
another.