The German government agreed Tuesday on draft legislation for the nationalization of failing banks, dpa reported.
Details have been finalized for a rescue package tailored to troubled mortgage lender Hypo Real Estate (HRE), with measures specifying that any nationalization process would need to be initiated by late June.
The short term nature of the proposal makes it clear that it is tailored to ailing HRE, which has been hit hard in the ongoing credit crunch.
The draft proposals, which are due to be agreed in a cabinet meeting Wednesday, form part of the 480-billion-euro (605-billion- dollar) rescue package agreed in October.
The proposal stresses that a complete state takeover of a bank would be the final resort in efforts to help stabilize Germany's financial markets.
This means that other measures, such as state acquisition of a controlling majority, would need to be considered failures before Germany will consider nationalization.
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