German Finance Minister Wolfgang Schaeuble has been lobbying for his country’s smaller lenders to be exempted from paying into Europe’s 55 billion-euro ($76 billion) bank-resolution fund, government documents show.
The Finance Ministry told the European Commission that banks with liabilities of less than 500 million euros should be granted “lump-sum exemptions” from contributions to the planned Single Resolution Fund, according to the two-page ministry position paper, dated Feb. 24, that was circulated to lawmakers in Berlin.
Negotiators have to hammer out rules for how much banks will have to pay to fill up the fund after European Union lawmakers agreed yesterday on legislation to create a single agency to handle failing euro-area banks. The German government is siding with savings banks, the country’s biggest source of credit, as they object to bailing out failed lenders while larger commercial banks say everyone in the industry must pay.
The Finance Ministry paper seeks to contrast the risks associated with large banks with those related to Germany’s savings and cooperative banks, saying that a bank’s size “should be the main risk indicator” for financial stability.
Germany’s position is that small, low-risk banks must be burdened less than large banks, a Finance Ministry spokeswoman said. She asked not be named, citing department policy.
While Schaeuble welcomed the agreement reached yesterday after a marathon session in Brussels, German savings banks said that the system will place unfair burdens on them. Germany’s national wind-down fund doesn’t count the first 300 million euros of a bank’s liabilities in assessing dues.
“A bank regulation that weakens the substance of regionally active financial institutions in order to hedge the risks of major international banks is neither appropriate nor fair,” Georg Fahrenschon, president of the DSGV savings banks’ association, said at a news conference in Frankfurt yesterday.
“At the end, all institutions benefit from measures that guarantee the stability of the financial market,” Michael Kemmer, the group’s head, said in a statement.
The BVR lobby of German cooperative banks is calling for the 500 million-euro exclusion cited by the government because small banks “wouldn’t draw on the resolution fund anyway,” the group said in a statement on its website.
Germany’s 417 savings banks had about 708 billion euros of outstanding loans last year, DSGV said. The savings banks’ loans compare with Deutsche Bank AG’s 183 billion-euro German loan book at the end of September, which excludes funds extended to other banks and the public sector.
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