After savings pledge, Germany eyes bank shield

By Matthias Sobolewski and Noah Barkin

BERLIN (Reuters) - Germany said on Monday it was considering a nationwide "umbrella" to shield its banks from market turmoil as concern mounted in Berlin about the risks of financial contagion for Europe's largest economy.

A day after the government pushed through a rescue of lender Hypo Real Estate and announced a blanket guarantee for private savings deposits, Finance Minister Peer Steinbrueck said a "Plan B" for the German financial sector was under discussion.

Germany has resisted pressure from European partners for an EU-wide rescue package for banks that would mirror the $700 billion plan in the United States and, until Monday, argued that bank troubles should be handled on a case-by-case basis.

But Steinbrueck reversed course on Monday: "I am very much aware that at some point individual solutions are no longer enough," he told reporters in Berlin.

He said Berlin was looking at putting up an "umbrella for Germany as a whole" so it no longer had to go from one case to the next.

Confusion reigned, however, about the specifics of Steinbrueck's plan. When pressed for more detail, his spokesman Torsten Albig told Reuters the minister had not been talking about a general state guarantee for banks, but rather "structures that make it easier to deal with the crisis."

It was the second time in weeks that the ministry appeared to row back on comments made by Steinbrueck. Last week he spoke of an "orderly unwinding" of Hypo Real Estate before abruptly changing tack.

Concerns about the health of the banking sector sent German stocks plunging 7 percent on Monday, in line with drops on other European bourses.