Contrary to media speculation, Germany will not guarantee savings
BERLIN – After a weekend of press speculation and rumour, it appears Germany will not guarantee all private savings accounts. Chancellor Merkel’s comments that German investors would not lose were not a committal to formal guarantees, according to the BBC website.
Speculation of a guarantee, which would have been worth around €500 billion (£390 billion), followed schemes by Ireland, Greece and Denmark. It prompted a UK Treasury plea for confirmation over the weekend, and placed pressure on UK prime minister Gordon Brown to follow suit. German regulator Bafin has described media reports as “misleading”.
German chancellor Angela Merkel and finance minister Peer Steinbrück announced the success of plans to rescue German lending bank Hypo Real Estate in Berlin on Sunday. The state-led bail-out has cost €50 billion of mostly government money. The deal was pushed through by the German government after the first rescue attempt faltered when German banks rejected the deal. Steinbrück said Hypo – Germany’s fourth largest bank – was too big to fail.
In a statement on Bafin’s website, the regulator said: “The risk-shielding strategy, which was agreed last weekend by the German financial sector in consultation with Bafin and the Bundesbank, has the objective of enabling the HRE [Hypo Real Estate] Group to eliminate its liquidity difficulties and re-size its risk positions.”
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