The request could come as early as Tuesday according to Bavarian finance minister and bank head Erwin Huber, Bild newspaper reported.
Under rules finalised by the German cabinet yesterday morning, banks hit by the crisis may apply for up to €10bn in assistance, with executives receiving a maximum salary of €500,000. The government can also force banks to reduce or entirely give up those lending practices it considers too risky, while allowing them to continue making loans to small and medium-sized firms deemed safe. The government also retains the right to buy back banks’ failed assets at a maximum €5bn per lender.
After Parliament’s rushed passage of the plan last week, jittery banks responded yesterday with relief.
“It’s very good that the state has reacted so quickly with this package,” said Thomas Schlueter, spokesman for the Association of German Banks.
It’s still too soon to know how many of those banks will be requesting aid, he added, but “it was clear from the start that if there will be money from the state, there would be conditions”.
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Bank representatives in Europe’s largest economy were set to meet yesterday as part of a regular series of meetings to discuss their demands amid the biggest rescue package in postwar Germany.
Starting yesterday, the banks are authorised to request guarantees on loans of less than 36 months from the €400bn government fund.
They will also be able to ask for direct investment from an €80bn state fund in exchange for equity shares. The government’s decision on who to lend to – and for what amount – will be made on a case-by-case basis, only to be made public if a bank’s regulations require it.
Commerzbank chief Martin Blessing said his bank, the country’s second largest, would be looking over the bailout plan’s provisions, while Mr Huber of BayernLB has already stated an intention to request “billions of euros” in liquidity and state guarantees.