BaFin: German banking clean-up could involve €816bn of assets

Up to €816 billion of assets could be involved in a potential clean-up of the banking system, according to a report by the German finance regulator Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin).

The confidential report was leaked to German daily newspaper Süddeutsche Zeitung on April 24. The €816 billion total includes €268 billion of Hypo Real Estate's assets, €101 billion for Commerzbank, €84 billion for Westdeutsche Landesbank and €21 billion for Deutsche Bank, along with several other Landesbanks.

BaFin has launched criminal investigations into who might have leaked the report to the press. A spokesperson for BaFin said the report was not intended to be public information; the data in the report was produced for Germany's ministry of finance at its request.

BaFin said the figures in the report were its own estimations of bank assets calculated from several surveys it had sent out it banks over various periods. They were not intended to be measurements of toxic assets only, but of both troubled and liquid, stable assets that could taken off banks' balance sheets as part of a government-led clean-up of the financial sector or banks' own decisions on changes in business strategy.

Germany's ministry of finance, the central bank and the SoFFin financial stabilisation fund will deliver a plan to the cabinet in May on how to deal with the country's toxic assets. Media reports anticipate this will take the form of a 'bad bank' model, where a government entity will take troubled assets off banks' balance sheets to stabilise the sector.

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