Germany agrees to take up banking levy

 
City A.M. Reporter
Germany’s cabinet yesterday agreed to adopt a levy on bank assets which will raise around €1bn (£818m) a year for bailouts, a government source said, a move that small lenders slammed.

Small banks complained the new bank restructuring bill fails to rule them out as potential contributors toward a common pot for rescuing big banks, whose collapse would send shock waves through the financial system.

The levy aims to shift the cost of bailouts to the private sector in a bid to avoid future taxpayer-led salvage efforts.

The bill, which is expected to come into force next year after parliamentary approval, would also give the state powers to coordinate restructuring of banks struck by crisis.
“We can’t understand the list of those called upon to contribute,” a spokesman for the association of German savings banks said.

He added: “It’s like asking the driver of a small car to help pay the insurance for a large hazardous goods transporter.”

Large banks would benefit at the expense of smaller and stable lenders, the spokesman said.