August 25, 2010 / 9:17 AM / 8 years ago

German cabinet backs bank restructuring bill

BERLIN, Aug 25 (Reuters) - The German cabinet backed a bank restructuring bill on Wednesday that includes a levy on bank assets to raise around 1 billion euros ($1.27 billion) a year to fund future bailouts, a government source said.

The levy is aimed at tackling the “too big to fail” problem of big banks assuming taxpayers will ride to their rescue, and the government is backing it after the German state stumped up billions of euros to rescue banks during the financial crisis.

The bank charge would be levied to finance a fund aimed at dealing with any future bank crises. The bill, which is expected to come into force next year, would also give the state powers to coordinate the restructuring of crisis-struck banks.

The size of the charge is linked to banks’ individual risk profiles.

The financial crisis forced German taxpayers to rescue stockmarket-listed lenders IKB IKBG.DE and Hypo Real Estate, which was nationalised, with billions of euros in capital and guarantees. Berlin also took a 25 percent stake in Commerzbank (CBKG.DE).

Finance Minister Wolfgang Schaeuble said in a weekend newspaper interview Germany wants to sell its stake in Commerzbank as soon as possible.

Germany pushed for the Group of 20 economic powers to take a coordinated stance on a bank levy but national differences hindered progress and world leaders abandoned the idea in June. ($1=.7901 Euro) (Reporting by Matthias Sobolewski; writing by Paul Carrel; editing by Simon Jessop)

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